NSS Economics
Effective Teaching & Learning Strategies Workshop
Topic: Law of Diminishing Marginal Return
Developmental Stage:
[Objective: Read numerical data in a table, Clarify the relationship between fixed factor,
variable factor & total product]
Task 1: Read the data of the following table and answer the questions
1.
2.
3.
4.
Machine
Labour
Total No. of Sports Shoes
1
1
15
1
2
40
1
3
69
1
4
80
1
5
90
What are the inputs in this production?
What is the output in this production? How do we describe this output level in Economic term?
Which item belongs to fixed factor? Which one is variable factor?
Try to describe the following Input-Output relationship:
i.
The relationship between the total product and fixed factor.
ii.
iii.
The relationship between the total product and variable factor.
Does the total product change at the same rate? Please give evidence to support
your answer.
5. The firm is now in short-run or long-run production period? Why?
[Objective: Calculation of TP & AP, clarify the concept of AP]
Task 2: Fill in the missing figures for average product and total product
Machine
Labour
Total Product (TP)
4
1
120
4
2
250
4
3
420
4
4
540
4
5
Average Product (AP)
140
120
1. Which of the following statements do you think is the correct definition of Average Product?
Statement 1: ‘Average Product is the amount of output per unit of a fixed factor employed.’
Statement 2: ‘Average Product is the amount of output per unit of a variable factor employed.’
2. Can you write down the formula of Average Product?
©HKETA (2009)
P.1
AP = ------------------
[Objective: Assessing students’ understanding in the previous stages]
Quiz: Fill in the missing figures in the following table
Variable Factor
Fixed Factor
Total Product (TP)
Average Product (AP)
7
10
70
______
8
10
88
______
9
______
______
13
10
10
150
______
______
18
11
12
10
216
______
…
…
…
…
______
______
240
12
[Objective: Calculation of MP, clarify the concept of MP]
Task 3: Fill in the missing figures for average product and marginal product
1.
2.
3.
4.
5.
Machine
Labour
Total Product
(TP)
4
1
20
4
2
44
4
3
72
4
4
105
4
5
143
4
6
173
4
7
195
4
8
210
4
9
220
4
10
213
Average Product
(AP)
Marginal Product
(MP)
How do you describe the changes of marginal product?
From which unit of labour, the marginal product begins to decrease?
Can you think of some reasons in explaining the changes of MP?
State the law of diminishing marginal returns.
Explain whether the above data illustrate the law.
©HKETA (2009)
P.2
Scaffolding Strategy:
CHECKLIST OF THE STEPS:
a. Identify the KEY data in the table.
(i) factors of production (e.g. Capital & Labour)
(ii) given output level (TP / AP / MP)
b. Identify the variable / fixed factors.
(i) Capital  The number is ‘fixed’ / ‘increasing’ / ‘variable’?
(ii) Labour  The number is ‘fixed’ / ‘increasing’ / ‘variable’?
c. What ‘run’ is it?
d. Identify the changes in MP.
(i) Convert the given data into MP:
- Given TP MP
- Given APTPMP
(ii) Describe the changes of MP with the changes of variable factors.
e. Making judgment: explain whether the data illustrate the law.
Criteria:
(i) Is it in short-run production period?
(ii) Does the MP eventually decrease when more and more variable factors are added to the
production?
Further Discussion / Challenging Questions:
1. If you are the owner of the firm, will you employ the labour if his/her MP is a negative number?
2. How about if his/her MP is a positive number? Is it a ‘MUST’ condition for us to employ
him/her? What other factors do we need to consider?
©HKETA (2009)
P.3
Motivation by examination:
Adding varieties by providing students more exercises & more discussion through group work.
Anchoring Exercise:
Level 1: Simplest Example
The table below shows the production of a firm.
Machinery
Labour
Total Product
3
1
20
3
2
45
3
3
75
3
4
90
3
5
100
Explain whether the above data illustrate the law of diminishing marginal returns.
Suggested Answer:
The law of diminishing marginal returns states that in the _______ run, as more and more
_________ factors are added to a certain quantity of __________ factors, the __________ product
will eventually _____________, holding ______________________________________.
The following data are derived from the table given in the question:
Machinery
Labour
Total Product
3
1
20
3
2
45
3
3
75
3
4
90
3
5
100
Marginal Product
The above data ________ illustrate the law of diminishing marginal returns.
As shown in the table, machinery is a _______ factor and labour is a ________ factor in its
production; the firm is operating in the _________ run.
Given the quantity of _____________ is fixed, when the ____-th unit of labour is added, the
marginal product of labour starts to decrease from _____units to _____units, which illustrates the
law of diminishing marginal returns.
Level 2: Non-Example
Machinery
Labour
Total Product
1
1
20
2
2
45
3
3
75
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P.4
4
4
90
5
5
100
Explain which law in economics can be illustrated by the above data.
Suggested Answer:
a. Define the economic law.
________________________________________________________________________________
________________________________________________________________________________
b. The firm is operating in short run or long run, why?
________________________________________________________________________________
________________________________________________________________________________
c. Explain whether the above data illustrate the law in (a).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Level 3: More Complex question
No. of workers
No. of working hours
per worker
Machines (Units)
Average Product
10
11
3
20
10
10
3
45
10
9
3
75
10
8
3
90
10
7
3
100
Explain whether the above data illustrate the law of diminishing marginal returns.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
©HKETA (2009)
P.5