Lemonade Stand A K through 12 Economics Experience

1. Lemonade StandA K through 12 Economics Experience Presented at St. Cloud State Winter Institute Gregory W. Stutes, Ph.D.

3. CoolMath • http://www.coolmath-games.com/lemonade/index.html • Buy cups, lemons, sugar, and ice • Ice melts at the end of the day • Can set price, lemons per pitcher, sugar per pitcher, and ice per pitcher—can change price again after you open • Temperature and weather forecast

5. The Original • http://www.virtualapple.org/J_lemonadestanddisk.html • From right here in Minnesota; all others are copies or modifications • Multi-player • 3 Decisions • How many glasses to make • How many signs to make • What is the price

9. Too Simple? • The graphics are very low-res • The sounds are goofy at best • Kitschy– Yes! • But is that what we want?

10. Short Discussion • What make a good simulation? • Is too realistic too distracting? • Do we ignore the principles when the game has prefect sounds and lifelike images? • Do we “play the game”? • Pool and economics

11. BIG ISSUE • These programs are in Java • While Java is used everywhere (except Apple products) there are potential problems • People are always trying to hack Java • Be sure you have the latest version!!!!

13. Carly Leffelman • Former Minnesota State University Mankato student • Youth Transition Specialist working with middle school and high school aged students • Independence Inc.

14. The Economics of a Lemonade StandA Lesson on the Basic Economic Principles behind Business • Carly Leffelman

15. Introduction • Running a business involves very important economic components and decision-making skills. A business owner must understand the basics of supply and demand, as well as how to make a profit. How does a producer know how much to produce and sell to the consumer? How much is the consumer willing to pay for a product? What components will either hinder or benefit a product's chances of being purchased? Every business must take into account the different costs that they will experience throughout the production process. Through decision-making, the business owner will have to assign a certain amount of employees to work, determine a set wage, and factor in the overhead that their facilities and capital create. During the buying and selling process, different economic components could thwart the producers ending profit. The law of diminishing returns states that by adding more of one factor to the overall production of a product or service will eventually lead to a decrease in output and therefore a decrease in profit. The overhead that businesses experience can also cause a decrease in both short-term and long-term returns. Businesses must delegate how many hours they will operate, how many people they will employ, and how they will utilize their resources and capital. Thus, through running a mock business, students will be able to apply their basic understandings of economic principals to their business venture.

16. Previous Knowledge Expected: • Supply: The amount of some product which is available to customers. • Demand: The desire to own a product and also having the willingness to pay. • Profit: Difference between a firm's total revenue and total costs.

17. Previous Knowledge Expected: • Overhead: An ongoing expense that businesses and firms experience throughout production. • Revenue: Income that a business receives through business activity. • Cost: The value or price necessary to produce something. • Diminishing Returns: by adding more of one factor to the overall production of a product or service will eventually lead to a decrease in output and therefore a decrease in profit.

18. Concepts: • Supply and Demand Graph: The visual representation of the supply and demand for a firm's production.

19. Content Standards From National Content Standards in Economics: • From Content Standard 2: • Effective decision making requires comparing the additional costs of alternatives with the additional benefits. • From Content Standard 14: • Entrepreneurs are people who take the risks of organizing productive resources to make goods and services. Profit is an important incentive that leads entrepreneurs to accept the risks of business failure.

20. Content Standards From National Content Standards in Economics: • Content Standard 1: • Students will be able to use their economic knowledge to understand the basics behind decision making that corresponds with business. • Content Standard 14: • Students will be able to act as entrepreneurs through analyzing the lemonade stand scenarios given and calculate their final profit as lemonade stand owners. They will also be applying a basic graph of supply and demand to their final outcomes.

21. Lesson Description • In this lesson, students will take the role as entrepreneurs in a lemonade stand business venture. They will work together in groups of three to four to analyze the basic economic components that take place in business. Each group will be given a business scenario that will list the following:

22. list the following: • Cost of supplies • Price • Number of employees • Hourly wage • Number of customers per day

23. Instructions • Each group must read through the scenario and be able to recognize which information is necessary for their calculations. They must calculate their total profit for each of the ten days. • In the end, each group will work cooperatively to write a short description of their lemonade stands success or failures. Within this description they must incorporate a basic supply and demand graph and explain how that would work in regards to a lemonade stand.

24. Day #1: • It's sunny. You are selling it for $.10 a cup. There is enough lemonade for 100 cups to be sold. The ingredients necessary cost you $5.00. 87 people stop by, but only 73 buy a glass of lemonade. You have two people at the stand working, each expecting 25% of your total profit for the day. • What is your profit? • How much do the employees receive? • What is your total cost?

25. Day #2 • It's partly cloudy. You have decided to sell your lemonade for $.15 a cup. There is enough lemonade to sell 85 cups. The ingredients necessary cost you $.75 because you had to buy more ice. 79 people stop by, but only 62 people purchase lemonade. You have 1 person at the stand working and expects to receive 25% of the total profit for the day. • What is your profit? • How much do the employees receive? • What is your total cost?

26. Day #3 • It's raining today. You have decided to sell you lemonade for $.10 a cup again. There is enough lemonade to sell 95 cups. The ingredients cost you $1.25 because your lemons went bad. Only 34 people stop by, but only 25 people purchase lemonade. You have 2 people at the stand working because no one likes to sit in the rain alone. Each expects 25% of the total profits for the day. • What is your profit? • How much do the employees receive? • What is your total cost?

27. Day #4 • It's breezy and mostly sunny. You have decided to sell your lemonade for $.20 because the rain has passed and everyone's happy. There is enough lemonade to sell 100 cups. The ingredients cost you $1.00 because you needed more sugar. You have only 1 person working the stand and they expect 25% of the day's total profit. Out of 50 potential customers, 45 purchase a cup of lemonade. • What is your profit? • How much do the employees receive? • What is your total cost?

28. Day #5 • Today is a scorcher! It's 95 degrees and humid. You have decided to sell your lemonade for $.25 a cup. There is enough lemonade to sell 100 cups. The ingredients cost you $1.00 because you had buy more cups. You have 3 people working the stand because you expect it to be very busy. Each employee expects 25% of the day's final profit. 142 customers stop, but only 100 customers purchase because you sold out! • What is your profit? • How much do the employees receive? • What is your total cost?

29. Day #6 • Today is cooler than the day before. It is cloudy, and a little windy. You have decided to sell you lemonade for $.15 a cup. There is enough lemonade to sell 65 cups. The ingredients cost you $2.00 because you had to buy more ice and cups after yesterday's sellout! You have 1 person working the stand and they expect 25% of the day's total profit. Out of 56 potential customers 43 stop and purchase lemonade. • What is your profit? • How much do the employees receive? • What is your total cost?

30. Day #7 • Today is storming! You have decided to not open your stand today. • What is your profit? • How much do the employees receive? • What is your total cost?

31. Day #8 • Today is nice- a nice breeze and the sun is shining! You have decided to sell your lemonade for $.15 a cup. There is enough lemonade to sell 80 cups. The ingredients cost you $.50 because you had to purchase more lemons. You have 1 person working the stand and they expect 25% of the day's total profits. Out of 78 potential customers, 64 stop to purchase lemonade. • What is your profit? • How much do the employees receive? • What is your total cost?

32. Day #9 • Today is nice again. It's hot and sunny. You have decided to sell your lemonade for $.20 a cup. There is enough lemonade to sell 95 cups. The ingredients cost you $1.00 because you had to purchase more ice. You have 2 people working the stand and they both expect 25% of the day's total profit. Out of 90 potential customers, 89 stop by to purchase a cup of lemonade. • What is your profit? • How much do the employees receive? • What is your total cost?

33. Day #10 • Today is HOT! You have decided to sell you lemonade for $.25 a cup because it's your last day! There is enough lemonade to sell 125 cups. The ingredients cost you $1.50 because you had to get more sugar and ice. You have 2 people working the stand because you expect to be very busy. Each employee expects 25% of the day's total profit. Out of 150 potential customers, 125 purchase lemonade because you sell out! • What is your profit? • How much do the employees receive? • What is your total cost?

34. Interactive Lemonade Stand Economics for Kids • by Choxy

35. Day 1: • Begin the lemonade unit by discussing with students what they would need to run a lemonade stand. What raw materials would they need? Where should they put their lemonade stand? Where and how should they advertise? Have students complete this worksheet.

36. Worksheet 1    ___________’s Lemonade Stand Supply Demand Consumers Producer Product Raw Materials Price Part 1: Use the words from the words above to complete the sentences. 1. You are starting your own lemonade stand. This means that you are a _____________ and the lemonade is the _____________that you are making and selling. 2. Sugar, ice, cups and lemons are all _______________ that you will need to make lemonade. 3. The people that buy lemonade from your stand are called _________________. 4. The _____________ is how much lemonade that you have available. The _____________ is how much lemonade that people want. 6. The _____________ of your lemonade tells consumers how much money they will need to buy your lemonade

37. Day 2: • On the second day of the lemonade activity, students should focus on marketing their lemonade stand. Begin the lesson by discussing the basic principles of advertising. As a class, complete the online activity "Create your own Ad" created by pbskids. This online activity will allow students to help create an advertisement for "Burp Cola" (which they think is hysterical). They will pick the slogan, image, ad copy and location of the advertisement. Discuss with the students why they made the choices that they did. On a large sheet of blank paper, have each student create their own advertisement for their lemonade stand.

38. Day 3: • I stumbled upon a great interactive lemonade game online. There are many different lemonade games online, but this game was more appropriate for the age level of my students (third grade). Allow students to play the game while filling out this data sheet. Students will experience how weather and price can effect the supply and demand of their lemonade. They will also have to set the price per cup and decide how much lemonade to make each day. These choices and experiences will allow them to experience economics firsthand!

39. Link • http://www.omsi.edu/exhibits/moneyville/activities/lemonade/lemonadestand.htm • A good game. Allows different levels of difficulty through the weather. Only select number of pitchers and the price.

40. Worksheet #2  _________’s Lemonade Stand You have opened a lemonade stand and are trying to make a profit. Complete the following chart for your first seven days of business. What was your total profit after seven days? Did you make money or lose money? Why do you think this happened?

41. Day 4: • Today each student will share his/her total profit with the class. Students who made money will discuss why they think they were successful and students who did not make a profit will discuss the mistakes that they made. A great way to end the lemonade activity is by allowing students to drink lemonade while discussing their business strategies!

44. The Lemonade War • by Jacqueline Davies • ISBN-13: 978-0-618-75043-6 • ISBN-10: 0-618-75043-6 • The following is a teachers’ guide provided by the publisher.

45. About the book The Lemonade War tells the story of an exciting summer spent by a loving but competitive pair of siblings, Evan and Jessie Treski. At the end of the summer, Jessie, the younger and more academically inclined of the two, is delighted to learn that because she is skipping third grade, she will be in Evan’s fourth grade class when school starts in a few days. To say the least, Evan is less than thrilled. The children’s personal conflict becomes a professional one as well, as they set out to outsell each other at their respective lemonade stands. The arc of the narrative follows the arc of Evan and Jessie’s business endeavor, from inception to actualization to dissolution, with all the ups and downs along the way. Davies manages to follow this course without becoming dry or dull—in part because the ups and downs of the Treskis’ business endeavor are tied to the ups and downs of their relationship. The characters are lively, realistic, and well defined, and their conflict is handled with sensitivity and without influencing the reader to take sides. We find ourselves rooting for both of these creative and hard-working children all the way through to the book’s satisfying conclusion.

46. Special Features • The title of each chapter in The Lemonade War is a business term or concept, with its definition just below (for example, “Chapter 1: Slump slump (slump) n. a drop in the activity of a business or the economy”). • Economic concepts are defined throughout the book as Jessie investigates, researches, and develops her own ideas. • Each chapter contains examples of Evan’s and Jessie’s attempts to calculate sales, profit, expenses, etc. Readers may choose to study the math problems in depth, working them out on their own, or may choose to read on. • In addition to the math problems and definitions, the book contains some wonderful charts, diagrams, and newspaper clippings, and even a realistic sales receipt. This lovely touch engages the reader and fleshes out the Treskis’ story.

47. Guided Discussion Questions • Have you ever felt competitive with someone you are close to, like a sibling or a good friend? How was this embodied? What did you do? How was it resolved? • Evan is so angry with his sister he can barely stand it! Has Jessie consciously done anything to harm her brother? Explain the root of Evan’s anger. • Jacqueline Davies chose to create Evan and Jessie as characters that don’t fit the stereotype of boys and girls, in terms of both their academic strengths and challenges and their social strengths and challenges. Do you think that these stereotypes (girls as intuitive but not good at math, boys as good at math but not so good at reading people’s feelings) get in the way at your school?

48. Guided Discussion Questions • Even though Jessie and Evan are having a hard time with each other, they don’t want their mom to know. Can you explain why they are so careful not to show her they are quarreling? Have you ever felt like this? • Evan is pretty sure that Scott Spencer stole the lemonade money he “borrowed” from Jessie. Why doesn’t Evan confront Scott? Why doesn’t he ask for his money back? • How do Evan and Jessie finally resolve the conflict—both their lemonade war and their personal war? • Both children have to admit that they’ve done mean things to each other before they can move on. Have you ever done something out of anger that you wish you hadn’t? How did this play out?

49. Activities • If your class studies The Lemonade War at the end of the school year, set up a lemonade study in the classroom. Learning from Evan’s and Jessie’s successes and mistakes, help your students design and implement their own lemonade stand(s). You may choose to divide the class into groups and have each group plan their own stand, designing posters, advertisements, and other business schemes, as Evan and Jessie did. You may choose to have the entire class work together on a plan. Children might sell lemonade during recess, or even set up in the cafeteria during lunch time. Decide together as a class how the money earned will be spent. Taking a leaf from Jessie Treski’s book, children may want to donate money to a charity of their choice or to school projects. They may choose to devote a certain percentage of their profits to a culminating celebration in school—a pizza party or lemonade party, for example! • Using the model described above, encourage children to design and implement a store of some kind that relates directly to your school’s curriculum. For example, schools doing a neighborhood study may choose to study a local grocery store and then set up a store of their own in the classroom for a day.

50. Activities • Make copies of the math problems in the book for your students. As you read the book aloud, highlight the math problems as a part of your students’ experience of the book. Can they think of other ways to figure out the problems? Are their methods more or less efficient than Evan’s and Jessie’s methods? • Personal conflicts like Evan and Jessie’s are often at the core of good works of fiction. As part of a unit of study on realistic fiction or as a separate project, have your students design and write a story with a personal conflict at its root. You may want to have your students write sketches of their main characters and an outline of the plot (including conflict and its resolutions) as part of their writing process.