Lauren started a lemonade stand to earn money. She researched supply and demand to determine her pricing. On the first hot day, Lauren priced her lemonade at $0.50 and sold out quickly due to high demand from thirsty passersby. The next day, she raised the price to $1 and earned more money. However, when another stand priced at $0.50 opened, Lauren's sales dropped due to lower demand. By lowering her price again and having the only product left, Lauren was able to raise her price back to $1 due to high demand and low supply. Lauren learned about how supply and demand affect pricing through running her lemonade stand.

1. Have you ever tried to become successful atHave you ever tried to become successful at
selling something? What things did you have toselling something? What things did you have to
think about before getting started?think about before getting started?
 Lauren was talking withLauren was talking with
her parents about startingher parents about starting
her own lemonade standher own lemonade stand
over dinner one night.over dinner one night.
They got into a discussionThey got into a discussion
about supply and demand.about supply and demand.
Lauren had never heard ofLauren had never heard of
such a thing. Her parentssuch a thing. Her parents
had informed her thathad informed her that
there might be otherthere might be other
people selling the samepeople selling the same
product for less. She hadproduct for less. She had
to do some research toto do some research to
ensure she would makeensure she would make
the most money for herthe most money for her
product.product.

2. Starting a businessStarting a business
 Lauren collected all of theLauren collected all of the
things she would need.things she would need.
She borrowed money fromShe borrowed money from
her parents to gether parents to get
lemonade, cups, sugar,lemonade, cups, sugar,
and a stand.and a stand.
 Next, she had to decideNext, she had to decide
how much she was goinghow much she was going
to sell her lemonade for.to sell her lemonade for.
If you were Lauren, howIf you were Lauren, how
much would you sell it for?much would you sell it for?
Why?Why?

3.  Lauren decided to sell herLauren decided to sell her
lemonade for $.50. Shelemonade for $.50. She
made her stand andmade her stand and
decided to start on thedecided to start on the
hottest day of thehottest day of the
summer. It was 95summer. It was 95
degrees outside and shedegrees outside and she
had her lemonade standhad her lemonade stand
on a very busy corner. Aon a very busy corner. A
lot of runners, bike riders,lot of runners, bike riders,
and dog walkers would beand dog walkers would be
crossing her path.crossing her path.
How successful do you predict Lauren’s
Lemonade stand will be? Why?

4. Why do you think Lauren sold out so quickly?Why do you think Lauren sold out so quickly?
What factors contributed? Turn and talk.What factors contributed? Turn and talk.
 Lauren sold out of herLauren sold out of her
lemonade within an hour. Shelemonade within an hour. She
made $25.00. She used $10made $25.00. She used $10
to buy more supplies for theto buy more supplies for the
following day leaving her withfollowing day leaving her with
a profit of $15.00a profit of $15.00
 She was shocked and did notShe was shocked and did not
understand why she sold outunderstand why she sold out
so quickly. She decided toso quickly. She decided to
ask her parents.ask her parents.

5. Write in your journal whether youWrite in your journal whether you
think Lauren should raise herthink Lauren should raise her
price or lower it. Why?price or lower it. Why?
 Lauren asked her parents herLauren asked her parents her
question. They told her that itquestion. They told her that it
was because of supply andwas because of supply and
demand. Her demand (howdemand. Her demand (how
many people want hermany people want her
product) was high because ofproduct) was high because of
weather conditions. She alsoweather conditions. She also
chose a high traffic area. Herchose a high traffic area. Her
supply (how much of asupply (how much of a
product one has) was low soproduct one has) was low so
people wanted her product.people wanted her product.
 Lauren thought about it andLauren thought about it and
figured that if this was true,figured that if this was true,
she could change her priceshe could change her price
tomorrow. She couldn’t decidetomorrow. She couldn’t decide
if she should make it higherif she should make it higher
or lower.or lower.

6.  The next day, Lauren decided to change her price toThe next day, Lauren decided to change her price to
$1.00. The weather was the same. She went out to the$1.00. The weather was the same. She went out to the
same spot. This time she made $45.00.same spot. This time she made $45.00.
 She was shocked! Lauren had realized since her demandShe was shocked! Lauren had realized since her demand
was high, and her supply still low, she could raise thewas high, and her supply still low, she could raise the
price and people would still pay for it.price and people would still pay for it.
 She decided tomorrow she would do the same thing againShe decided tomorrow she would do the same thing again

7. Circle the things you think LaurenCircle the things you think Lauren
should change for tomorrowshould change for tomorrow
1. her lemonade recipe1. her lemonade recipe
2. her price2. her price
3. The location3. The location
4. The way her stand looks.4. The way her stand looks.
Write in your journal why youWrite in your journal why you
picked the things that you did.picked the things that you did.
 Lauren went back out theLauren went back out the
following day with herfollowing day with her
lemonade for $1.00. This timelemonade for $1.00. This time
there was another lemonadethere was another lemonade
stand selling lemonade for $.50stand selling lemonade for $.50
– Lauren didn’t sell hardly ANY– Lauren didn’t sell hardly ANY
lemonade.lemonade.
 She was confused. It was stillShe was confused. It was still
hot outside. She still didn’thot outside. She still didn’t
have a high supply.have a high supply.
 She went home to ask herShe went home to ask her
parents.parents.

8.  Lauren talked to her parents that night. They explainedLauren talked to her parents that night. They explained
supply and demand to her yet again. They said that whensupply and demand to her yet again. They said that when
someone’s demand is high (like hers was), then they cansomeone’s demand is high (like hers was), then they can
raise the price. But when competition comes along, theraise the price. But when competition comes along, the
demand drops, which means the price needs to drop also.demand drops, which means the price needs to drop also.
 They also told her when the supply is high and everyone isThey also told her when the supply is high and everyone is
able to receive the product, that the demand is lower.able to receive the product, that the demand is lower.
 Lauren was disappointed that she could not sell herLauren was disappointed that she could not sell her
lemonade for more money.lemonade for more money.

9.  The final lemonade day,The final lemonade day,
Lauren lowered her priceLauren lowered her price
again to $.50 in order toagain to $.50 in order to
keep up with thekeep up with the
competition. She wascompetition. She was
selling lemonade fast. Herselling lemonade fast. Her
competition was sold outcompetition was sold out
first. All of a sudden therefirst. All of a sudden there
was a rush to her stand.was a rush to her stand.
She only had 7 glassesShe only had 7 glasses
left.left.
 WHAT SHOULD SHE DO??WHAT SHOULD SHE DO??
 Record in your journal.Record in your journal.
Knowing what you knowKnowing what you know
about supply and demand,about supply and demand,
what should Lauren do?what should Lauren do?

10.  Lauren decided to raise her price back up toLauren decided to raise her price back up to
$1.00.$1.00.
 Q: Why was she able to do this??Q: Why was she able to do this??
 A: Her demand was very high. She was the onlyA: Her demand was very high. She was the only
person with lemonade product and many peopleperson with lemonade product and many people
wanted it. Her supply was also very low since itwanted it. Her supply was also very low since it
was the end of the day and people were hot.was the end of the day and people were hot.