Divide the classroom into two teams. The core element of a free-market business environment is competition, and this helps the simulation to become more life-like and entertaining.
Ask children of both teams to vote for their company's CEO (chief executive officer). Afterwards, describe the role and objectives of the management, marketing and financial departments, and ask the CEO to appoint specific kids to each team.
Explain the issue of specialization in a specific sector of the economy (for example making shoes or providing financial advice) and the importance of a witty trade name. This is what the management team of each group -- along with the CEO -- must discuss.
Give the financial department of the two "companies" an equal amount of credit in U.S. dollars. From now on, you are the person to set the production cost of every good or service they intend to offer.
Ask children to have business meetings (it can be two circles where children can whisper their thoughts) and come up with their new product within their financial limits. Their target market is the school's students. A member of the marketing team must present the new products in class.
Instruct students to talk to children from other grades during recess with the purpose of selling their product. Each transaction requires the name, grade and signature of the buyer. Ask other teachers to instruct their students to take part in the simulation as potential buyers.
Assist financial teams in calculating their sales income. Show them how to calculate profit by deducting the production cost from income.
Introduce children to the issue of taxation, if they have learned about percentages. Assume the role of an IRS officer and ask 15% of the income as corporate tax. Again the financial team must figure out the amount their company must pay.
Ask the CEOs of each group to announce the total profits of their company, after tax. The group with the largest figure is the winner.