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JMU Center for Economic Education (MH) Adapted from Children in the Marketplace, 1986 ©Joint Council on Economic Education Case Study: Maximize Profit from Lemonade Sales! Name _________________________________________________________________ Date ____________________ 1. To make each cup of lemonade, how much did Terry have to pay for the lemons, sugar, and cups? __________ 2. How much did Terry have to pay (per cup sold) to rent a desk for the lemonade stand? ___________ 3. According to Terry's figures, what was the total cost of production for one cup of lemonade? _________ 4. Which resource did Terry forget to consider when figuring the cost of production? ________________________ 5. Complete the following table: A B C D E F PRICE: (Market Survey) QUANTITY: (Market Survey) TOTAL REVENUE: (A x B) COST PER UNIT: (From Cost Records) TOTAL COST: (B x D) TOTAL PROFIT: (C - E) Possible price per cup of lemonade Number of cups of lemonade that could be sold Total sales for lemonade at this price Cost to produce one cup of lemonade Total cost of producing this much lemonade Profit from lemonade sales at this price 50 40 30 25 20 15 6. To make the most profit (to maximize profit) Terry should sell each cup of lemonade for ___________. 7. According to this market survey, Terry will be able to sell ________ cups of lemonade at this price. 8. Terry's market survey included six classmates from a class of 24 students. How should Terry decide how much lemonade to produce?

JMU Center for Economic Education (MH) Adapted from Children in the Marketplace, 1986 ©Joint Council on Economic Education Maximize Profit from Lemonade Sales! Name _________________________________________________________________ Date ____________________ 1. To make each cup of lemonade, how much did Terry have to pay for the lemons, sugar, and cups? ___17_______ 2. How much did Terry have to pay (per cup sold) to rent a desk for the lemonade stand? ___2________ 3. According to Terry's figures, what was the total cost of production for one cup of lemonade? ___19______ 4. Which resource did Terry forget to consider when figuring the cost of production? _______labor_________ 5. Complete the following table: A B C D E F PRICE: (Market Survey) QUANTITY: (Market Survey) TOTAL REVENUE: (A x B) COST PER UNIT: (From Cost Records) TOTAL COST: (B x D) TOTAL PROFIT: (C - E) Possible price per cup of lemonade Number of cups of lemonade that could be sold Total sales for lemonade at this price Cost to produce one cup of lemonade Total cost of producing this much lemonade Profit from lemonade sales at this price 50 0 0 19 0 0 40 1 40 19 19 21 30 2 60 19 38 22 25 6 150 19 114 36 20 12 240 19 228 12 15 18 270 19 342 -72 6. To make the most profit (to maximize profit) Terry should sell each cup of lemonade for ____25_______. 7. According to this market survey, Terry will be able to sell ____6____ cups of lemonade at this price. 8. Terry's market survey included six classmates from a class of 24 students. How should Terry decide how much lemonade to produce? One fourth of the class participated in the market survey. Terry can estimate that the quantity demanded by the entire class will be 4 times as great (4 x 6 = 24 cups of lemonade), and prepare accordingly.