Interactive lecture on diminishing marginal product: tennis ball production
In this interactive lecture, the engagement trigger is a demonstration in which students "produce" tennis balls with fixed capital and increasing labor, thus generating a production function. Students calculate the marginal product of each worker and discover that marginal product falls as the number of workers rises.
Marginal product of labor, diminishing marginal product.
Context for Use
This activity is intended for a Principles of Microeconomics course. It is appropriate for any class size; however, instructors of varying class sizes may want to choose different methods for assessment. This is an interactive lecture segment, with the demonstration serving as an engagement trigger. The demonstration itself can be completed in as little as ten minutes, although the accompanying lecture and class discussion will likely fill the rest of a 50-minute class period. The instructor will need to bring the materials (tennis balls and buckets).
Students should already be familiar with the concepts of marginal thinking and cost-benefit analysis. The description here focuses on diminishing marginal product only but the activity could easily be extended for a more in-depth discussion of costs by adding input prices and using the data generated by the demonstration to create all the various costs curves (average, fixed, variable, etc.).
Description and Teaching Materials
Some discussion of the activity can be found at http://economicsforteachers.blogspot.com/2010/02/diminishing-marginal-product.html.
Set up two buckets, several feet apart, with several tennis balls in one of the buckets. Students have a set amount of time (I use ten seconds) to move tennis balls from one bucket to another; each ball that makes it into the empty bucket counts as one unit produced. Students must carry the balls from one bucket to the other; balls cannot be thrown and any ball that bounces out of the bucket will not count. Begin with one student and then add additional 'workers' in each round, recording the total production for each round. Total production should rise for the first few rounds but eventually, diminishing marginal product should set in and total output will level off and even begin to fall, which is a good point to stop. Once you have the production function data, define marginal product and calculate marginal product for the first two or three workers in the demonstration. Then have students calculate the marginal product of each of the rest of the workers in the demonstration, and discuss why marginal product begins to fall as there are more workers.
Teaching Notes and Tips
The production 'technology' can vary, depending on your students and room environment. I tell the students that each student can only carry one ball at a time and they must individually place the ball in the other bucket but an alternative is to let them form a line and pass the balls down (diminishing marginal product sets in partly because they invariably start dropping them). The important thing is that you have to be very clear with them that they cannot change the technology as they add more workers; as long as that's clear, you should start getting diminishing marginal product pretty quickly. You can vary the amount of time for each round, or how far apart the buckets are, and that will affect the total length of the demonstration (and total production numbers) but should not impact when diminishing returns set in.
This works well for large classes; even though only a small subset of the students are physically participating, the other students get involved by cheering on their classmates. If you have enough space, you can even set up two firms on opposite sides of the room; they will invariably try to compete with each other and while this has nothing to do with the ultimate objective (demonstrating diminishing returns), it can ensure that students really are trying to maximize their output, and the rest of the class will typically root for the firm on their side of the classroom.
Because I teach a very large class, I assess the students with clicker questions. After running the demonstration and calculating marginal product for the first two workers, I ask the students to calculate the marginal product of each of the other workers. Before we go through the answers together, I have them use their clickers to indicate the marginal product of, say, the fourth worker.