Kindergarten students understand concepts easier if they relate the idea with an existing experience. Ask students about presents they usually get for their birthdays or the holidays. Once students think and state their gifts, explain to the class that each giver had to go to someone, a vendor, to purchase that gift. After this, begin the conversation on goods and services.
Goods are the gifts that students received for their birthdays or holidays. Services are the times their parents take them out to eat. Goods and services exist because of scarcity; people need the things that they cannot perform or find themselves. Each person must purchase or give something in return to receive a good or service.
To further the lessons about goods and services, use the toys or activity sets around the kindergarten classroom as exercises in economics. For example, ask one student to prepare toy food. Instruct other students to go to the designated student and ask for the service. Let the student serve the toy food at a set price that's paid with fake money. If the service student is asking for too much money, inform the students that prices for goods and services need to be relative to how much the demand is for them.
Use examples to explain goods and services further. Ask students what their parents do for a living. Then, ask what the students thinks their parents do: provide a service or a create a good. Depending on the actual occupation or answer by the student, explain that what each parent does is either providing a service, a good or both. The both aspect could need further explanation; a kindergartner might think people can only be producers of goods or service providers.