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Tennis balls and diminishing returns

To make the Activity work successfully, it is imperative that the rules be followed strictly. The activity consists of an imaginary factory
where the business has to move tennis balls from one bucket to another. On successful transfer, the firm generates one unit of output.
Initially, the firm has some fixed factors - in this example, capital. The capital stock consists of 2 buckets and a batch of tennis balls.
Therefore this factory is operating in the short run. The tennis balls are very delicate and can be easily damaged so care must be taken
in transferring them.
The rules are as follows:

You cannot throw the balls.


Balls must not be dropped into the bucket - if they are, they are counted as damaged goods and do not count towards final
output.

Any balls dropped between the buckets also become damaged goods.

Each production run lasts for 30 seconds - you must keep strictly to this time limit.

You cannot change the rules once you have agreed on a technique for moving the tennis balls from box to box

The Task:
The task is to take balls out of one box and place them into the second box. At the end of each production run, the firm will add an extra
unit of labour to production. The production levels will be recorded at the end of each production run. Your task is to monitor the output
levels with each different combination of inputs. The results are recorded on the sheet below.
Total Output or Product. In this case the number of tennis balls successfully moved from one box to the other.
Average Output or Product: Is measured by dividing total output by the number of workers. It also gives us a measure of the
productivity of each additional worker.
Marginal Output or Product is the additional amount of total output (tennis balls) gained by the addition of one extra worker.

Labour
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

Total Product

Average Product

Marginal Product

What happens to output as you add workers to total output?


What would you say is the optimum number of workers you would employ?
What would you expect to happen to business costs once you employ more the optimum number of workers?

How could the business improve efficiency?

Having answered the above question, how would you define diminishing returns? If one factor of production is increased
while the others remain constant, the overall returns will relatively decrease after a certain point.

How could the business avoid the problems caused by the principle of diminishing returns?

Productivity (Output per worker or factor of production) is a very important measure of efficiency and remember is
measured by dividing output by the number of workers.

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