Lesson 6: Nothing Can Be Excellent without Risk of Failure

Activity 6.2: Entrepreneurs & Profit

Crops like this corn (actually more properly called Indian Maize) are always a risk. The more you plant, the more chance you have of having a larger harvest and greater profit. However, you also run the risk every year that the crop will fail and leave you with nothing.

Entrepreneurs are essential to any modern economy, but what are they? In this lesson you will learn about entrepreneurs, meet some famous entrepreneurs, and understand the concept of profit.

Benchmark:

5.2.4.6.1: Describe the concept of profit as the motivation for entrepreneurs; calculate profit as the difference between revenue (from selling goods and services) and cost (payments for resources used).

Learning Target:

I can...determine the amounts of profit, revenue, and cost in a story problem

Essential Question:

How is the concept of profit a motivation for entrepreneurs? How do I calculate profit as the difference between revenue (from selling goods and services) and cost (payments for resources used)?

To complete Activity 6.2 please follow the steps below:

STEP 1: Watch What is an Entrepreneur? Then respond to the following questions in the add submission text box.

  1. What does an entrepreneur risk?

  1. In your own words, what exactly is an entrepreneur?

  1. Who are some other well-known entrepreneurs and what did they create?

  1. How is being an entrepreneur like gambling?

  1. What are some skills and characteristics of entrepreneurs?

  1. What do you believe would be the most challenging part of being an entrepreneur?

STEP 2: Read the following passage and answer the questions that follow:

Profit is revenue minus cost. For example if you owned a pizza shop, profit is the money you “make” after the customer pays you subtract how much it cost you to bake and deliver your pizzas. It would look like this if it were a math problem:

Profit = Revenue - Cost

Now, let’s add some numbers in as if you owned a pizza shop.

The customer paid you $20.00. This is your revenue.

It cost you $5.00 dollars to bake and deliver the pizzas.

If Profit = Revenue - Cost, then:

20 (revenue) - 5 (cost) = $15.00 profit

Now, take a look at a colonial example:

Davey Poindexter is a colonial entrepreneur. His father settled in Massachusetts in the 1690s and created a lumber business that sold lumber to England’s Royal Navy. By the time Davey grew up in the 1720s, he took his know-how of the family’s lumber business and made it better. In fact, he made it awesome. Instead of only using the family’s land to chop down trees for the lumber that he sold the Royal Navy, Davey decided to buy as much forest land as possible and sell it to farmers as soon as he cleared it. He soon became the most successful timberman in New England. If Davey Poindexter’s largest timber order sold for 2000 pounds (sort of like a “dollar”) and it cost him 500 pounds in equipment and employee’s wages to get the timber to the Royal Navy, then what was the profit Davey earned from this order?

  1. What was Davey’s revenue on his largest order?

  1. What were Davey’s costs on his largest order?

  1. What was the profit Davey earned from from this order?

  1. If Davey was forced to pay taxes on the equipment he used to harvest the lumber, how would it affect his profit?

  1. In your own opinion, why were profits so important to entrepreneurs like Davey Poindexter?

STEP 3: Now, you will take your responses to these questions and submit them using the add submission text box.