Unit 9 · Money, Markets and Regions

Think about a loaf of bread. A farmer grew the wheat. A mill ground it into flour. A baker mixed the dough and baked it. A truck driver carried it to the store. Each of those people is a producer. A producer is anyone who makes something or does work that others want.

Now think about who eats the bread. You do. The person who buys a loaf and uses it is a consumer. A consumer is someone who buys or uses goods and services. When you buy a pencil at the school store, you are a consumer. When your family buys gas for the car, they are consumers too.

Here is the surprising part. Almost everyone is both. The baker is a producer at work. On the way home, she buys shoes, so she is a consumer. Devon is a producer when he runs the store table. He is a consumer when he buys a pencil from it. Producers and consumers need each other.

Walk through a shopping street. In one window there are shoes, bread and toys. Those are goods. A good is a thing you can touch and take home. A pencil is a good. So is a bike, an apple or a video game disc. Producers make goods in factories, on farms and in kitchens.

Next door is a barber shop. The barber does not sell you a thing to carry away. He cuts your hair. That is a service. A service is work that one person does for another. A doctor’s visit, a bus ride, a haircut and a dog-walk are all services. Teachers, nurses and mail carriers all sell services.

Sometimes a business sells both. A pizza shop sells a pizza, which is a good. If the shop delivers it to your door, that delivery is a service. In Chicago, a huge share of jobs are in services, like health care, offices, restaurants and trucking. Fewer people make goods than in the past.

Maya has two dollars. She wants a notebook that costs two dollars and a pack of stickers that costs two dollars. She cannot buy both. This problem has a name: scarcity. Scarcity means there is not enough of something to do everything people want. Money is scarce. So is time, land and water.

Because of scarcity, every choice has a cost that is not printed on a tag. If Maya buys the notebook, she gives up the stickers. The stickers are her opportunity cost. The opportunity cost of a choice is the next best thing you did not pick. It is what you gave up.

Families, businesses and cities face this too. A city has a fixed budget. If it spends money on a new pool, it may not fix a street that year. The street is the opportunity cost of the pool. Good choosers name the opportunity cost out loud before they decide. That way they know what they are trading.

On the Friday of the big test, everyone wanted pencils. That wanting, joined with the money to pay, is called demand. Demand is how much of something people will buy at a certain price. On a normal Friday, demand for pencils is low. On test day, it shoots up.

Price changes demand too. At ten cents, kids bought three pencils each. At twenty-five cents, most would buy one. When the price goes down, people buy more. When the price goes up, people buy less. That pattern is so steady that economists call it a law.

Demand can also change for reasons that have nothing to do with price. A test makes demand rise. A snow day makes it fall to zero. If a famous singer holds a pencil in a video, demand might jump. A market is any place where buyers and sellers meet, and the school store is a tiny one.

The class had two hundred pencils. That number is the supply. Supply is how much of something sellers are ready to sell at a price. Sellers like higher prices. If pencils sold for a dollar, the class would order more boxes. If they sold for a penny, the class might not bother.

Now put supply and demand together. On test day, demand was high and supply was small. That is when a store runs out. The line got long. Some kids left empty-handed. A shortage is when buyers want more than sellers have at that price.

A higher price fixes a shortage in two ways. It makes some buyers take fewer. It makes sellers bring more. When the class raised the price to fifteen cents and ordered four hundred pencils, supply went up and demand went down. They met in the middle. That is what markets do every day, all over the world.

A price is the amount of money you trade for a good or service. But a price is also a message. When strawberries cost six dollars a box in January, the price says they are hard to get right now. In June, when Illinois farms are picking, the price drops to two dollars. The price says: plenty here, buy now.

Sellers read prices too. When pencils sold out fast at ten cents, the price was telling the class it was set too low. When the price of corn is high, farmers plant more corn. When it falls, some switch to soybeans. No one has to order them. The price does the talking.

Prices are not perfect. A price does not say whether something is good for you. It does not say whether a family can afford it. That is why people also use rules, taxes and help for people in need. But as a quick way to move goods to the people who want them most, a price is a powerful tool.

Amara walks her neighbor’s dog every afternoon. Each week she gets ten dollars. That is earning. People earn money by producing something, from a dog-walk to a day at a factory. Some people earn a wage by the hour. Some earn a salary by the year. Some own a business and keep what is left after costs.

Amara has a plan for her ten dollars. Four go in a jar for a bike she wants by summer. That is saving, keeping money now to use later. Five she spends on snacks and a book. One she puts in a can at her mosque for families who need food. That is giving. Many families give to a church, a temple or a food pantry.

Her plan is a budget. A budget is a written plan for money coming in and going out. It is simple math, but it changes lives. If Amara skipped the plan, she might spend all ten and never get the bike. Writing down the plan makes the opportunity cost of every snack easy to see.

A jar under the bed is a risky place for one hundred dollars. It can be lost, stolen or spent on a whim. So people take money to a bank. A bank is a business that keeps money safe. When you put money in, the bank writes down what it owes you. That is your account. You can take it out when you need it.

The bank does not leave your money in a pile. It lends most of it to other people. A family borrows to buy a house. A baker borrows to buy a bigger oven. They pay the money back over time, plus extra. That extra is interest. Interest is the price of using someone else’s money.

The bank shares some of that interest with you for letting it use your savings. So a savings account grows a little every year. In the United States, a government program insures bank accounts up to a set amount. If a bank fails, savers still get their money. That rule came after many banks closed in the 1930s.

Who paid for the street outside your school? Who pays the firefighters? No single family could buy a fire truck. So people pool their money through taxes. A tax is money that people and businesses must pay to a government. In Illinois, the state adds a sales tax to most things you buy. Workers pay a tax on what they earn. Homeowners pay a tax on their houses.

That money buys public goods. A public good is something everyone can use and no one can be kept from using, like a road, a park, a streetlight or clean air. A store cannot sell a streetlight one glow at a time. So governments provide it and taxes pay for it. Public schools, libraries and fire protection are paid the same way.

People argue about taxes all the time. Some say taxes are too high and take money families could use. Others say they are too low to fix roads and pay teachers. Both sides are talking about opportunity cost. Every tax dollar spent on one thing is not spent on another, and every dollar not collected is a public good not built.

Drive across central Illinois in August and you see corn for miles. Fly to Florida and you see orange groves. Why not the other way around? Illinois has deep, dark soil and warm, rainy summers. Corn loves that. Florida is warm all winter. Orange trees die in a hard freeze, so they need a place that stays warm.

This is specialization. To specialize is to focus on the thing you can do best. Illinois specializes in corn and soybeans. Florida specializes in oranges. Idaho grows potatoes. Wisconsin makes cheese. Each place makes more by doing what its land and weather favor, instead of trying to grow a little of everything.

People specialize too. In Room 210, Maya is best with money and Devon is best with counting. So Maya keeps the box and Devon keeps the stock. A dentist does not bake her own bread. She fixes teeth all day and buys bread with what she earns. Specializing lets each person get very good at one thing.

Specialization only works if you can trade. To trade is to give something you have for something you want. Illinois sends corn and soybeans down the Mississippi River and across the world. Trucks and trains bring back oranges, cars, phones and shoes. Without trade, Illinois families would have no oranges at all.

Trade works because both sides win. Think of lunch. Sam has two bags of grapes and no crackers. Leo has two packs of crackers and no grapes. Each trades one for one. Now each has grapes and crackers. Nobody lost. The same thing happens when a country trades wheat for coffee.

Trade also has costs, and people argue about them. When a factory moves to another country, workers here can lose jobs. Goods get cheaper for consumers, but some producers are hurt. Both sides of that argument use real evidence. Knowing that trade makes the whole pie bigger does not tell you who gets each slice.

In the early 1900s, a young man named Richard Sears sold watches by mail from a small railroad station. Later, with a partner, he built a company in Chicago. It mailed a thick catalog to farm families. They could order a stove, a dress or even a whole house kit. Sears saw a problem. Farm families lived far from stores. He found a way to solve it.

Sears was an entrepreneur. An entrepreneur is a person who starts a business, taking the risk that it might fail. Risk means the chance of losing something. Entrepreneurs put in their own money, time and sleep. Many businesses do fail. The ones that succeed create jobs and new goods and services.

You do not need to be famous to be one. The kids with the lemonade stand are entrepreneurs. So is the teenager who fixes phones after school. An entrepreneur looks for a need that is not being met, thinks of a way to meet it and tries. Room 210’s store began that way, with one question: what do kids keep running out of?

Imagine the Earth as a ball with a net drawn on it. Some lines run side to side. Those are lines of latitude. The middle line is the equator. It is zero degrees. Lines north of it are labeled north, up to ninety degrees at the North Pole. Chicago sits at about forty-two degrees north.

Other lines run up and down from pole to pole. Those are lines of longitude. The zero line, called the prime meridian, passes through Greenwich, England. Lines are counted east or west from there. Chicago is about eighty-eight degrees west. So Chicago’s address on the Earth is forty-two north, eighty-eight west.

Latitude also hints at weather. Places near the equator are usually hot. Places far north or south are cold. Miami, Florida, is at about twenty-six degrees north. Chicago is much farther north, so Chicago has snowy winters and Miami almost never sees snow. Sailors, pilots and phone maps all use these two numbers to find any spot on Earth.

A map of Illinois fits on one page. The real Illinois is almost four hundred miles from top to bottom. How can that work? Every map is shrunk by the same amount. The scale tells you how much. A scale might say one inch equals fifty miles. Then a two-inch gap on the map means one hundred real miles.

Most maps show scale as a small bar with numbers, like a tiny ruler. To use it, measure the distance between two towns on the map with a strip of paper. Then hold the strip against the scale bar and read the miles. On a road map, that tells you how long a drive will be.

Scale changes with the map. A map of your school might use one inch for twenty feet. A map of the whole country might use one inch for two hundred miles. On that big map, Chicago is just a dot. On a city map, Chicago fills the whole page and you can see every street. Big area, small scale. Small area, big detail.

Open two maps of the United States side by side. On the first, you see brown mountains, green lowlands and blue rivers. There are no state lines. This is a physical map. It shows things nature made: mountains, plains, deserts, lakes, rivers and coasts. The Rocky Mountains show up as a long brown ridge down the west.

On the second map, the land is divided into fifty colored shapes with names. Dots mark cities. Stars mark capitals. This is a political map. It shows things people decided: state borders, country borders, cities and capitals. A state line is invisible on the ground. You only see it on a political map.

Some borders follow nature and some do not. The Mississippi River is the western edge of Illinois, so that border wiggles like the river. The northern edge of Illinois is a straight line drawn by lawmakers in 1818. Reading both kinds of maps together tells you the most. You can see why Chicago sits where Lake Michigan meets the prairie.

The United States is huge, so people sort it into five regions. A region is an area where places share things, like landforms, weather or history. The Northeast is the smallest region by land. It runs from Maine down to Pennsylvania. It touches the Atlantic Ocean, and its coast is rocky in the north and sandy in the south.

The Appalachian Mountains run through the Northeast. They are old, rounded mountains covered in forest. Winters are cold and snowy. Fall turns the hills red and gold. Rivers cut through the mountains to the sea. Early towns grew where rivers could turn mill wheels.

The Northeast has the biggest city in the country. New York City has about eight million people. Boston and Philadelphia are old port cities from before the American Revolution. Today many people there work in offices, banks, hospitals and universities. Fishing boats still leave from Maine and Massachusetts harbors. They have done so for four hundred years.

Step off a plane in Atlanta, Georgia, in July. The air feels like a warm, wet towel. The Southeast has hot, humid summers and mild winters. Humid means the air holds a lot of water. Rain is heavy. That is why the region is so green, with pine forests, swamps and the wide grassy wetland in Florida called the Everglades.

Two coasts wrap the Southeast. The Atlantic is on the east. The Gulf of Mexico is on the south. The Mississippi River ends here, spreading into a delta near New Orleans. The northern part has the southern end of the Appalachian Mountains. The Smoky Mountains in Tennessee and North Carolina are the tallest in the east.

The warm weather lets farmers grow oranges, peanuts, cotton and rice. Ports like New Orleans and Savannah ship goods around the world. Millions of visitors come for beaches and theme parks. But the warm ocean that draws tourists also feeds hurricanes. These huge storms hit the coast most years between June and November.

The Southwest is Texas, Oklahoma, New Mexico and Arizona. Much of it is desert, land that gets very little rain. Cactus grows where corn cannot. The Colorado River carved the Grand Canyon in Arizona, a gorge about a mile deep. The Rio Grande forms the border with Mexico. Cities like Phoenix and Houston have grown fast, and water is the region’s biggest worry.

The West is the biggest region. It reaches from the Rocky Mountains to the Pacific Ocean, and also includes Alaska and Hawaii. The Rockies are tall and jagged. Farther west, the Sierra Nevada and the Cascade Range rise near the coast. Between them lie dry basins and Death Valley, the lowest and hottest spot in the country.

Because the land is so varied, so is the work. California’s Central Valley grows a huge share of the nation’s fruit, nuts and vegetables. Washington and Oregon cut lumber and grow apples. Alaska catches fish and pumps oil. Los Angeles makes movies and Seattle makes software. The West also has earthquakes, wildfires and even volcanoes, like Mount St. Helens.

Stand in a field in central Iowa and turn all the way around. The land is nearly flat to every horizon. This is the Midwest. It stretches from Ohio to the Dakotas. Long ago, sheets of ice called glaciers pushed across this land and ground it flat. When they melted, they left rich, dark soil. That soil is the region’s treasure.

The Midwest has some of the biggest fresh water on Earth. The five Great Lakes sit along its northern edge. Lake Michigan is the only one entirely inside the United States. Three great rivers cross the region: the Mississippi, the Missouri and the Ohio. To the west, the land rises slowly into the dry grassland of the Great Plains.

Winters are cold and summers are hot. Farmers grow corn and soybeans and raise hogs and cattle. Wisconsin makes cheese. Cities like Chicago, Detroit and Minneapolis grew up around factories, railroads and lake ports. People in Illinois say they live in the heartland, a word for the middle of a country where much of its food is grown.

Illinois is shaped like a long arrowhead pointing south. Water frames almost every side. Lake Michigan touches the northeast corner. The Mississippi River runs down the whole west side. The Ohio River is the southern tip. The Wabash River makes much of the eastern edge. The Illinois River cuts through the middle from northeast to southwest.

Most of the state was once prairie, a sea of tall grass with almost no trees. Farmers plowed it into cornfields. The highest point, Charles Mound in the northwest corner, is only about 1,235 feet high. The southern tip has low, wooded hills called the Shawnee Hills. It is warmer down there, closer to Kentucky than to Chicago.

Two cities matter most. Springfield, in the middle, is the capital, where the state’s laws are made. Chicago, in the corner, is home to about 2.7 million people and is the biggest city between the coasts. The state has about 12.8 million people, and most live in the Chicago area. That is why Illinois is both a farm state and a big-city state.

Why does Maine have lobster boats and Kansas have wheat combines? The answer is natural resources. A natural resource is something useful found in nature, like soil, water, trees, fish, oil or minerals. Each region has a different mix. People build jobs around the resources close at hand.

The Midwest’s resource is soil, so it grows grain and feeds animals. The Southeast has warmth and rain, so it grows oranges and peanuts. The Southwest has oil under Texas and Oklahoma, so many people there drill and refine it. The West has forests, fish and long growing seasons in California. The Northeast has deep harbors, so it became a center of shipping and trade.

Resources shape food too. A Chicago hot dog, a Texas barbecue, a Louisiana gumbo full of shrimp and a Maine lobster roll each come from what was nearby. But resources are not the whole story. Chicago has no oil and no ocean. It became a giant city because railroads and Lake Michigan met there, and people brought the resources to it.

Ms. Duffy’s corn traveled by truck, then barge, then ocean ship. Each way of moving things is a kind of transportation. Barges are the cheapest way to move heavy loads like grain and coal. Trains are next. Trucks can go anywhere there is a road. Airplanes are the fastest and most expensive, so they carry people, mail and small valuable things.

Illinois sits where all of these meet. The Illinois Waterway links Lake Michigan to the Mississippi River, so a boat can go from Chicago to the Gulf of Mexico. More freight trains pass through Chicago than any other city in the country. Interstate highways cross the state in every direction. O’Hare Airport in Chicago is one of the busiest in the world.

This is not luck. In the 1800s, workers dug a canal from Chicago to the Illinois River. Then railroads chose Chicago as the place where eastern and western lines met. Being a hub, a center where routes come together, gave Chicago jobs in warehouses, rail yards and trucking that still exist today. Geography drew the map, and people built on it.

A natural hazard is a danger that comes from nature. Every region has some, but not the same ones. The Southeast gets hurricanes from the warm ocean. The West gets earthquakes, where the ground shakes, and wildfires in dry summers. The Southwest faces long droughts, years with too little rain. The Northeast gets blizzards and ice storms.

The Midwest has tornadoes, spinning funnels of wind that drop from storm clouds. They form where warm, wet air from the Gulf meets cold, dry air from the north. Illinois gets dozens most years, mostly in spring. The Midwest also gets floods when the big rivers rise. In 1993 the Mississippi flooded for months and covered farms and towns along the Illinois shore.

Because the hazards differ, so do the plans. Florida homes have shutters for hurricanes. California buildings are built to bend in an earthquake. Illinois schools practice tornado drills, moving to inner hallways away from windows. Knowing your region’s hazard is the first step in staying safe. The second step is a plan your family has talked through.