The Yo-Yo Business: A Case Study

Name: ______________________________Date: ____________

The story: In 1928, Filipino immigrant Pedro Flores opened America's first yo-yo factory in California. His key innovation — a looped string instead of a tied one — let the yo-yo "sleep" at the bottom, making every modern trick possible. In 1930, entrepreneur Donald Duncan bought Flores's company and turned the yo-yo into a national craze. Duncan's masterstroke was marketing: he hired teams of demonstrators (many of them Filipino immigrants) to perform tricks in front of stores across America, ran local contests, and sold millions of yo-yos. The inventor created the product; the marketer created the phenomenon.

Part A — The Numbers

Your company's numbers: each yo-yo costs $2.10 to manufacture and sells for $8.99. Monthly fixed costs (rent, wages, ads) are $5,000.

1. What is the profit per yo-yo (selling price − manufacturing cost)?

Show your work:

2. What is the profit margin as a percent? (profit per yo-yo ÷ selling price × 100 — round to one decimal place)

Show your work:

3. How many yo-yos must you sell in a month to break even (cover the $5,000 fixed costs)? Hint: you can't sell a fraction of a yo-yo — round in the direction that actually covers the costs.

Show your work:

4. If you sell 2,000 yo-yos in a month, what is your total profit after fixed costs?

Show your work:

Part B — Think Like an Entrepreneur

5. Duncan sent demonstrators to perform tricks in front of stores instead of just buying newspaper ads. Why do you think live demos worked so well for selling yo-yos? Give at least two reasons.

Write your answer:

6. Flores invented the looped string but eventually lost control of his company and trademark to Duncan. Was that fair? Consider both sides: the inventor who created the product, and the businessman who took the financial risk to scale it.

Write your answer:

✂ Teacher Answer Key (cut or fold under before copying)

1. $6.89 ($8.99 − $2.10)	2. 76.6% ($6.89 ÷ $8.99 = 0.766 → 76.6%)
3. 726 yo-yos ($5,000 ÷ $6.89 = 725.7 — round UP, since 725 × $6.89 = $4,995.25 falls short)	4. $8,780 (2,000 × $6.89 = $13,780 − $5,000)

5. Accept: kids could see what the toy does (a picture can't show a trick); live performance creates excitement and crowds (social proof); children could try it immediately and buy on the spot; the demonstrator taught tricks, which made buyers feel invested. 6. No single right answer — strong responses weigh both sides: Flores created the value but sold voluntarily; Duncan risked his own money and built the market. Look for evidence-based reasoning over a one-sided verdict.