I began reading Life of Fred: Pre-Algebra 2 With Economics with my daughter as part of her math curriculum, but quickly discovered the book is even better for teaching kids the basics of economics.
When the main character Fred discovered he could purchase a case of hot dogs to sell at his hot dog stand for $90 from "Freedonia, a floating island nation in the middle of the Atlantic," he was excited to bring down his prices and increase his profits. His former supplier, Whole Dog, who sold hot dogs for $100/case was less thrilled. The author explained that Whole Dog had three choices for dealing with the problem - lower their prices, use violence, or send lobbyists to the senator. Their strategy of sending lobbyists worked. They provided the senator lots of votes and tuition for his daughter's education, and he passed a law which a tariff of $40/case was levied on hot dogs. The story didn't end there. It continued with discussing who won and lost from the tariff and how decisions affect society as a whole.
Other topics such as how competition, using technology to replace people, and price fixing effects prices and society are discussed.Tulip mania, what materials work well for money, and the rule of 72 (used for predicting how long it will take for sales to double) are covered as well.
This book is filled with examples to explain how economics really works. America was formed around the principals in the constitution and grew to be a great and powerful nation because of capitalism. It's sometimes difficult to understand how decisions made which seem to protect the interests of citizens can actually end up having the opposite effects. This book does a wonderful job of explaining the long term effects of these decisions and I recommend it for middle and high school students studying government, economics or pre-algebra.
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