The members of the Elm Street Kid’s Club open a lemonade stand to earn money to build a new clubhouse. Business is brisk for a while, as shown by the children’s bar graphs. But in a few days, no one shows up to buy lemonade! What could be going wrong?
Who were the suppliers/producers in the story?
The children in the Elm Street Kid’s Club.
Why did they decide to make lemonade?
They wanted to earn money – a profit – to use to fix their clubhouse.
What were some of the productive resources the children used to supply lemonade?
Lemons, sugar, water, pitcher, spoons, table, tablecloth, the children themselves.
What was the quantity of lemonade demanded by customers on Monday, Tuesday, and Wednesday?
30 cups, 40 cups, and 56 cups.
What was the price of the lemonade?
$.25 a cup.
What sales revenues (i.e. how much money did they collect from sales) did the children earn from Monday through Wednesday?
$31.50 (126 cups X $.25)
How much profit did the children earn?
We can’t tell since we don’t know the cost of the productive resources.
Profit = Revenues minus costs.
What happened to the quantity demanded on Thursday? Why?
It dropped to 24 because all the people were watching Jed the Juggler.
What idea did Sheri have for increasing the demand for their lemonade?
They asked Jed to do his juggling right next to their lemonade stand.
Did their idea work?
Yes, Jed’s presence increased demand so much that their bar graph ran off the top of the page!
What do businesses often do to get more people to buy their goods and services?
Businesses regularly advertise to inform consumers about their products and persuade them to buy them, such as special sales, coupons, famous people at the store to attract customers, etc.
The children didn’t have to pay Jed to help them bring customers. When businesses advertise, do they have to pay money?
Yes! Advertising is a cost of doing business. Businesses must pay a lot if they advertise in “prime” locations and times, e.g. Super Bowl Sunday.
Do you think the children would be willing to pay Jed to juggle next to their stand? Explain.
Probably! They could pay Jed and still come out ahead as long as the income they earned from the extra customers was more than what they had to pay Jed.
Author: Stuart J. Murphy
Lexile Measure: 380
Publisher: Harper Collins