Always Stop at Lemonade Stands

Make the lemonade. Set out the cups. Cut a hole in the cardboard to create a cash box. The children at the table have everything they need to sell lemonade—except you. Sellers need buyers. When you stop for a cold drink, you teach the next generation something about how business works.

A lemonade stand is a place to learn about the need to obtain a product to sell. Lemon juice and sugar are raw materials. The neighborhood gang of kids who make the lemonade and staff the table are the labor force. The pitcher, table, and chairs are capital equipment. The kids may even think of the need for some coins in order to make change for the first few customers. This is start-up financial capital. Altogether, raw materials, labor, capital equipment, and financial capital are examples of resources or inputs. This is the supply side of the economy.

A lemonade stand is also a place to learn about selling. The cups of lemonade are the product or output. When you and your neighbors stop at the table, you become customers, the demand side of the economy. Through trial and error over the summer, the kids will learn about the four P's of marketing. product, price, place, and promotion. They will grow to see that being good at selling requires understanding buying behavior.

Just the other day, something new happened. The doorbell rang and there were two neighbor girls. They announced that they were selling lemonade and peach tea at the end of the block and urged me to stop by. This is active lemonade selling as opposed to passive. Very impressive!

A lemonade stand illustrates the black-box model of business. Inputs like lemon juice, labor, and capital equipment flow into a black box. Mysterious production happens inside the box: kids pour juice and sugar into a pitcher and mix them. Then outputs, such as lemonade, flow out of the black box and into the hands of customers.

Flowing back in the other direction is money. Customers pay for the output, lemonade, and the kids use the money to pay for the inputs: buying more lemon juice, maybe paying Mom and Dad rent for the table, and putting the residual in their own pockets.

Thus the lemonade stand becomes a market, a place where buyers and sellers come together and make a trade, lemonade for money. This market behavior happens all over our economy, often without corporate involvement or government oversight. People choose on their own to behave in such a way that the products are available when customers want to buy. On a hot day, there is a table full of kids in your neighborhood selling cold lemonade.

Here are the 52 topics that I will cover in this blog. Come back to read often. Make a comment.


1. Always Stop at Lemonade Stands
2. Meditate at Lunch
3. Make Your Mind Up Already
4. Rationalize All You Want
5. Take a Hike
6. Demand Everything
7. Supply Something
8. Maintain Balance
9. Think Before Controlling Prices
10. Pay Your Share of Public Goods
11. Market Elastically
12. Open the Black Box of Business
13. Choose How Big to Be
14. Count Your Profits
15. Climb the Productivity Hill
16. Plan for the Long Run
17. Build a Better Mousetrap
18. Create Brand Loyalty
19. Give People Choices
20. Play the Game
21. Keep an Eye on the Pendulum
22. Vote in the Economic Democracy
23. Jump into the Labor Pool
24. Ask for a Raise
25. Connect the Dots
26. Set Some Macroeconomic Goals
27. Target Full Employment
28. Stabilize Prices
29. Grow the Economy
30. Share the Macroeconomic Secret
31. Be Skeptical of Data
32. Watch Out for That Quagmire
33. Tax and Spend
34. Trade with a Foreigner
35. Be Fruitful, Multiplier
36. Buy, Buy, Buy
37. Sell, Sell, Sell
38. Find the Balance Point
39. Fight the Cycle
40. Look on the Supply Side of Life
41. Ignore Something Rationally
42. Balance the Budget Cycle
43. Take a Stand on the Debt
44. Barter
45. Take a Wooden Nickel
46. Gaze at the Gold
47. Contemplate Money
48. Create Some Money
49. Manipulate the Money Supply
50. Get Interested in Rates
51. Win with Inflation
52. Get on the Side of the Fed

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COPYRIGHT © 2008 by Robert D. Sandman
ALL RIGHTS RESERVED.