Lesson Plan
Course Title: Principles of Business, Marketing, and Finance
Session Title: When Less is More - - Lesson in Microeconomics, Part Two
Performance Objective:
The student analyzes cost and profit relationships in finance.
Specific Objectives:
4 (7) (D) Examine the impact of the law of diminishing returns.
Preparation
TEKS Correlations:
This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may
result in the elimination of one or more of the TEKS listed.
Interdisciplinary Correlations:
English:
§110.42. English I (c) The student is expected to:
(8)(B) read in such varied sources as diaries, journals, textbooks, maps, newspapers, letters, speeches,
memoranda, electronic texts, and other media;
(6)(A) expand vocabulary through wide reading, listening, and discussing; and,
(4)(F) compile written ideas and representations into reports, summaries, or other formats and draw
conclusions.
Economics:
§118.2. Economics (c) The student is expected to:
(5)(B) Interpret a production-possibilities curve and explain the concepts of opportunity costs and scarcity.
(23)(F) Evaluate economic-activity patterns using charts, tables, graphs, and maps.
Instructor/Trainer
References:
1. O’Sullivan, Arthur and Sheffrin, Steven M. (2007). Economics: Principles in Action. Boston: Pearson
Prentice Hall.
2. http://www.superkids.com/aweb/tools/words/scramble/
3.
4.
5.
6.
http://www.eduplace.com/graphicorganizer/pdf/kwl.pdf
http://ecedweb.unomaha.edu/lessons/euse8.html
www.economicsnetwork.ac.uk/events/newlecs/Games/Tennis%20balls%20instructions.doc
http://www.economicsnetwork.ac.uk/showcase/hedges_tennis
Optional lesson plans/activities
1. http://phschool.com/webcodes10/index.cfm?fuseaction=home.gotoWebCode&wcprefix=mna&w
csuffix=2056
2. http://ecedweb.unomaha.edu/lessons/euse1.htm
Copyright © Texas Education Agency, 2011. All rights reserved.
1
3. http://ecedweb.unomaha.edu/lessons/euse5.html
Instructional Aids:
1. Optional – Overhead, SmartBoard, Internet, ELMO (if available and where applicable)
Materials Needed:
1. Textbook
2. Internet
3. Copies of handouts
Teacher Preparation:
Instructors should review content from textbook and websites as well as lesson plan addendums prior to
class.
Learner Preparation:
Learners will review vocabulary terms the night before class and read Section 2 Costs of Production from
Economics in Action the night before class.
Lesson Plan
Vocabulary:
Marginal Product of Labor
The change in output from hiring one more worker
Increasing Marginal Returns
A level of production in which the marginal product of labor increases as the number of workers increases
Diminishing Marginal Returns
A level of production in which product of labor decreases as the number of workers increases
Fixed Costs
A cost that does not change, no matter how much of a good is produced
Variable Costs
Costs that rise or fall depending on the quantity produced
Total Costs
Fixed costs and variable costs added together
Marginal Costs
The additional cost of producing one more unit
Marginal Revenue
The additional income from selling one more unit of a good
Operating Cost
The cost of operating a facility such as a store or facility
Copyright © Texas Education Agency, 2011. All rights reserved.
2
Introduction (LSI Quadrant I):
At what point is it not advantageous to employ one more person? That is the question that the law of
diminishing returns answers. Corporations that produce and sell products hire numerous employees to
serve in the manufacturing process. However, there is a point at which management understands that
hiring one additional person is not cost effective; in fact, hiring that person negatively impacts profit margin.
Today, we will embark on a two-part series that will help us to better understand this economic law.
Outline
Outline (LSI Quadrant II):
Instructors can use the PowerPoint presentation, slides, handouts, and note pages to support and
reinforce the following outline.
MI
I.
See Multiple
Intelligences
(MI) key
below.
Outline
Application – Guided Practice
A. Students communicate
the concept of law of
diminishing returns and
related vocabulary.
B. Students explore the
meaning of diminishing
return through visual and
kinesthetic measures.
II. Application – Independent
Practice
A. Students demonstrate
comprehension of student
expectation by applying
information from guided
practice.
B. Students complete an
oral, informal assessment
based on their
documented research.
I.
Notes to Instructor
Application – Guided Practice
A. Instructor leads class in a discussion
of productivity through the following
steps.
1. Review the vocabulary words
above using Word Scrambler Law of Diminishing Returns, an
exercise primarily created from
superkids.com and saved as a
Microsoft Word document.
2. Complete a K-W-L chart
regarding the students’
understanding and wonderings
about the law of diminishing
returns (see Eduplace website for
example).
3. Discuss Cost of Production,
Section 2, from textbook to
ensure basic understanding.
a. Carefully review Figure 5.6.
b. Carefully review 5.9.
4. Complete activities that will
provide perspective on terms in
today’s lesson:
a.
b.
http://ecedweb.unomaha.e
du/lessons/euse8.html
(fixed versus variable cost)
Math Practice, page 114
(textbook)
Copyright © Texas Education Agency, 2011. All rights reserved.
3
5.
Discuss what was clarified from
the K-W-L chart.
6. Ask students to collaboratively
give their best definition to the
terms documented in the word
scramble under YOUR BEST
DEFINITION.
a.
Students present
responses to the class.
b.
Class develops best
response.
B. Instructor allows students to explore
content; activities appeal to
kinesthetic learners.
1. Distribute “The Tennis
Ball/Flowerpot Game” Word
document
a.
Website for Word
document:
www.economicsnetwork.ac.uk/
events/newlecs/Games/Tennis
%20balls%20instructions.doc
b.
Additional website for
further
clarification/extensions/vid
eo:
http://www.economicsnet
work.ac.uk/showcase/he
dges_tennis
2. Divide class into 2 teams
(groups).
a.
Complete directions on
page 1 of the document
referred to above in 1a.
b.
Use one person per team
to record the number of
balls placed into the
second bucket during each
production cycle (30
seconds = production
cycle) similar to Figure 5.6
in textbook.
1) Record output per
cycle in the file
entitled Tennis Ball
Spreadsheet on
either GROUP 1 –
SPREADSHEET or
GROUP 2 Copyright © Texas Education Agency, 2011. All rights reserved.
4
3.
4.
SPREADSHEET.
2) Calculate and record
marginal product of
labor.
3) Discuss results.
a) Sections in red,
column B and
cells N4, O4,
P4, and Q4, can
be altered to
change table’s
results [teacher
should consider
and make most
appropriate
change(s)
BEFORE
implementing
activity].
b) Focus on
columns A, B,
and C to
examine
marginal
product of labor
– production,
only.
c) Next, review D,
E, F, G, and H
to discuss the
cost perspective
of diminishing
returns.
d) Then, examine I
and J to discuss
the revenue
perspective of
diminishing
returns.
e) Finally, focus on
K and L to
discuss gross
profit.
Students individually document
answers to questions listed in
Discussion after the game from
the same Word document.
Students share answers with the
class; instructor moderates
discussion.
Copyright © Texas Education Agency, 2011. All rights reserved.
5
a.
II.
Summary
I. Summary Review Questions
A. Students will answer
review questions
Evaluation
I.
Evaluation
A. Students answer
assessment to evaluate
understanding of class
content.
Extension/Enrichment
I. Extension/Enrichment
A. Identify addition
questions to ask in order
to ensure understanding.
B. Students experience
diminishing returns
through a field trip.
C. Students interview
experts in manufacturing.
Optional: Use SmartBoard
or ELMO
Application – Independent Practice
A. Instructor directs each student to
create a visual representation of
his/her respective group’s results.
1. Focus on law of diminishing
returns with respect to
productivity, cost, and/or revenue.
a. Option 1: Use charts/graphs
in Microsoft Word, Excel or
PowerPoint
b. Option 2: Use graph paper to
plot results for math
reinforcement.
c. Option 3: Create flowchart
that represents productivity
process.
B. Instructor directs students to present
results to members of the class (post
results for part 2 of lesson).
I. Summary Review Questions
A. Ask review questions found on page 7
(see Summary)
I. Evaluation
A. Instructor directs students to complete
Microsoft Word Assessment Activity –
Cost of Production Quiz.
a. Second page of document reveals
answer key.
b. Students may use word scramble
activity to remind themselves of
terms.
I.
Extension/Enrichment
A. See After the Task questions at
B.
http://www.bized.co.uk/educators/16
19/economics/firms/activity/dimretur
ns.htm.
Challenge students to develop and
document another example to test the
law of diminishing return and teach
Copyright © Texas Education Agency, 2011. All rights reserved.
6
other students from school.
C. Organize a field trip to tour a local plant
that produces goods through assembly
line methods and talk to the Operations
manager.
D. Invite a factory manager to be a class
speaker and allow students to ask him
questions about the manufacturing
process/diminishing returns.
Copy and paste Multiple Intelligences Graphic in appropriate place in left column.
Verbal
Linguistic
Logical
Mathematical
Visual
Spatial
Musical
Rhythmic
Bodily
Kinestheti
c
IntraPersonal
InterPersonal
Naturalist
Existentialist
Application
Guided Practice (LSI Quadrant III):
I.
Application – Guided Practice
B. Instructor leads class in a discussion of productivity through the following steps.
1. Review the vocabulary words above using Word Scrambler - Law of Diminishing
Returns, an exercise primarily created from superkids.com and saved as a Microsoft
Word document.
2. Complete a K-W-L chart regarding the students’ understanding and wonderings about
the law of diminishing returns (see Eduplace website for example).
3. Discuss Cost of Production, Section 2, from textbook to ensure basic understanding.
a.
Carefully review Figure 5.6.
b.
Carefully review 5.9.
4. Complete activities that will provide perspective on terms in today’s lesson:
a.
http://ecedweb.unomaha.edu/lessons/euse8.html (fixed versus variable cost)
b.
Math Practice, page 114 (textbook)
5. Discuss what was clarified from the K-W-L chart.
6. Ask students to collaboratively give their best definition to the terms documented in the
word scramble under YOUR BEST DEFINITION.
a.
Students present responses to the class.
b.
Class develops best response.
C. Instructor allows students to explore content; activities appeal to kinesthetic learners.
1. Distribute “The Tennis Ball/Flowerpot Game” Word document
a.
Website for Word document:
www.economicsnetwork.ac.uk/events/newlecs/Games/Tennis%20balls%20instruct
ions.doc
Copyright © Texas Education Agency, 2011. All rights reserved.
7
b.
2.
3.
4.
Additional website for further clarification/extensions/video:
http://www.economicsnetwork.ac.uk/showcase/hedges_tennis
Divide class into 2 teams (groups).
a.
Complete directions on page 1 of the document referred to above in 1a.
b.
Use one person per team to record the number of balls placed into the second
bucket during each production cycle (30 seconds = production cycle) similar to
Figure 5.6 in textbook.
1) Record output per cycle in the file entitled Tennis Ball Spreadsheet on
either GROUP 1 – SPREADSHEET or GROUP 2 - SPREADSHEET.
2) Calculate and record marginal product of labor.
3) Discuss results.
a)
Sections in red, column B and cells N4, O4, P4, and Q4, can be
altered to change table’s results [teacher should consider and make
most appropriate change(s) BEFORE implementing activity].
b)
Focus on columns A, B, and C to examine marginal product of labor –
production, only.
c)
Next, review D, E, F, G, and H to discuss the cost perspective of
diminishing returns.
d)
Then, examine I and J to discuss the revenue perspective of
diminishing returns.
e)
Finally, focus on K and L to discuss gross profit.
Students individually document answers to questions listed in Discussion after the game
from the same Word document.
Students share answers with the class; instructor moderates discussion.
a.
Optional: Use SmartBoard or ELMO
Independent Practice (LSI Quadrant III):
Application – Independent Practice
A. Instructor directs each student to create a visual representation of his/her respective group’s
results.
1. Focus on law of diminishing returns with respect to productivity, cost, and/or revenue.
a.
Option 1: Use charts/graphs in Microsoft Word, Excel or PowerPoint
b.
Option 2: Use graph paper to plot results for math reinforcement.
c.
Option 3: Create flowchart that represents productivity process.
B. Instructor directs students to present results to members of the class (post results for part 2
of lesson).
II.
Summary
Review (LSI Quadrants I and IV):
•
•
Question: When is a producer’s profits maximized?
Answer: It is when marginal cost equals marginal revenue.
•
•
Question: A cost that does not change and is not affected by the number of goods produced.
Answer: Fixed cost
Copyright © Texas Education Agency, 2011. All rights reserved.
8
•
Question: What is the additional income from selling one more unit of good, sometimes equal to
price,
•
called?
Answer: Marginal revenue
•
•
Question: What action will eventually cause diminishing returns?
Answer: Employing additional labor when capital remains constant.
•
Question: Why are some employees considered variable costs while others are considered fixed
costs?
• Answer: Answers may vary. Some employees are paid salaries – a constant, predictable amount
that
does not change from period to period. Those who are considered variable costs are
paid
wages; their schedules can be modified based on the needs of the organization,
especially as it
relates to the production process.
Evaluation
Informal Assessment (LSI Quadrant III):
Evaluate answers to independent practice.
 Address issues raised in independent practice.
Formal Assessment (LSI Quadrant III, IV):
I.
Evaluation
A. Instructor directs students to complete Microsoft Word Assessment Activity – Cost of
Production Quiz.
1. Second page of document reveals answer key.
2. Students may use word scramble activity to remind themselves of terms.
Extension/Enrichment (LSI Quadrant IV):
I.
Extension/Enrichment
A. See After the Task questions at http://www.bized.co.uk/educators/1619/economics/firms/activity/dimreturns.htm.
B. Challenge students to develop and document another example to test the law of diminishing
return and teach other students from school.
C. Organize a field trip to tour a local plant that produces goods through assembly line methods
and talk to the Operations manager.
D. Invite a factory manager to be a class speaker and allow students to ask him questions about
the manufacturing process/diminishing returns.
Copyright © Texas Education Agency, 2011. All rights reserved.
9
NAME _____________________________________________
WRITING EVALUATION
CATEGORY
20
18
16
Introduction (topic
sentence)
The topic sentence is an excellent
introduction to the paragraph. It
tells the main idea and gives the
big picture
The topic sentence is a good
introduction to the paragraph. It
may too broad or have a detail
included.
Sequencing
(Organization)
Details are placed in a logical
order and the way they are
presented effectively keeps the
interest of the reader.
Ideas
Writer has an excellent grasp of
the topic. Student uses his/her
voice to express thoughts vividly.
Details are placed in a logical
order, but the way in which they
are presented/introduced
sometimes makes the writing less
interesting.
Writer has a good grasp of the
Writer knows the subject but does
subject. Student uses his/her voice not use his/her voice as much as
at times to express thoughts.
possible to express thoughts.
Writer makes no errors in grade
level appropriate capitalization or
punctuation.
Writer makes a couple of errors of Writer makes a few errors of grade Writer makes many errors of grade
grade level appropriate
level appropriate capitalization
level appropriate capitalization
capitalization and/or punctuation. and/or punctuation.
and/or punctuation.
Grammar & Spelling
(Conventions)
Capitalization &
Punctuation
(Conventions)
The topic sentence somewhat
introduces the paragraph. It does
not introduce the paragraph very
well and it includes too many
details.
Some details are not in a logical or
expected order, and this distracts
the reader.
14
The topic sentence does not
introduce the paragraph.
Many details are not in a logical or
expected order. There is little
sense that the writing is organized.
Writer uses just the facts to relay
thoughts. There is not much of the
student's own personality in the
writing.
Writer makes no errors in
Writer makes a couple of errors in Writer makes several errors in
Writer makes many errors in
grammar or spelling that are grade grammar or spelling that are grade grammar or spelling that are grade grammar or spelling that are grade
level appropriate.
level appropriate.
level appropriate.
level appropriate.
TOTAL
Copyright © Texas Education Agency, 2011. All rights reserved.
POINTS AWARDED
LAW OF DIMINISHING RETURNS
Units
of
Labor
0
Total
Marginal
Product Product
0
-
Fixed
Cost
Variable Variable
Cost
Cost
(Labor) (Product)
Total
Cost
Marginal
Cost
Total
Revenue
Marginal
Revenue
150.00
-
-
150.00
-
-
-
Profit
(Total
Revenue Total Cost)
(150.00)
1
0
150.00
7.25
-
157.25
7.25
-
-
(157.25)
2
0
150.00
14.50
-
164.50
7.25
-
-
(164.50)
3
0
150.00
21.75
-
171.75
7.25
-
-
(171.75)
4
0
150.00
29.00
-
179.00
7.25
-
-
(179.00)
5
0
150.00
36.25
-
186.25
7.25
-
-
(186.25)
6
0
150.00
43.50
-
193.50
7.25
-
-
(193.50)
7
0
150.00
50.75
-
200.75
7.25
-
-
(200.75)
8
0
150.00
58.00
-
208.00
7.25
-
-
(208.00)
9
0
150.00
65.25
-
215.25
7.25
-
-
(215.25)
10
0
150.00
72.50
-
222.50
7.25
-
-
(222.50)
11
0
150.00
79.75
-
229.75
7.25
-
-
(229.75)
12
0
150.00
87.00
-
237.00
7.25
-
-
(237.00)
13
0
150.00
94.25
-
244.25
7.25
-
-
(244.25)
14
0
150.00
101.50
-
251.50
7.25
-
-
(251.50)
15
0
150.00
108.75
-
258.75
7.25
-
-
(258.75)
Copyright © Texas Education Agency, 2011. All rights reserved.
Explanations
Fixed cost equals capital (buckets). Evaluate the impact of fixed cost by changing the amount in N4.
Variable cost for labor can be changed. Change the wage by entering the amount in cell O4.
Variable cost for product (tennis balls) can be changed. Change the cost by entering the amount in cell P4.
Market price for product (tennis balls) can be changed. Change the price by entering the amount in cell Q4.
Copyright © Texas Education Agency, 2011. All rights reserved.