The Law of Diminishing Marginal Productivity: Economics in a Box1
If you have any questions you can email Joab Corey at jcorey@fsu.edu
When you add more and more variable inputs to a fixed set of inputs then the output produced will
eventually increase by smaller and smaller amounts (and may eventually decrease). This is known as the
law of diminishing marginal productivity.
Objective:
The objective to this activity is to demonstrate to students, as the result of their own actions, just how
the law of diminishing marginal productivity works. This game can also be seen to help students see the
difference between marginal product and average product as well as reinforce previous concepts
depending on what you choose to have students write.
Materials:
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If you are demonstrating this on a chalk board or white board then you just need to draw a box on
the board and have enough chalk or markers for everyone to participate. If you are using a
document camera then you would need at least five (but possibly more depending on the size of
the box) pieces of paper with the same size box on each one.
Execution:
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Ask a volunteer to come to the front of the room and write the word “economics” as many times as
they can within the box in 30 seconds. Record their total output (the number times of they have
written “economics” as their total product. Also record the additional output compared to when no
one was writing it as Marginal Product and the total product divided by the number of workers as
the average product (these will be the same for this first volunteer).2
Add a second volunteer to come up and join the first volunteer and give them 30 seconds to write
the same equation as many times as they can within the box. Again record the total product,
marginal product and average product of the two volunteers.
Repeat this process of adding volunteers as many times as it takes for them to start crowding each
other out of the box so that diminishing marginal productivity takes hold. (hint: the bigger you
make the box the more volunteers you will need to make this happen and each round takes 30
seconds. So keep the box fairly small so that you can exhibit diminishing returns in 3 to 5 rounds).
Optional:
While this game demonstrates the law of diminishing marginal returns and how it relates to output in
the short-run, several other concepts can be demonstrated with this. One can use the numbers to show
1
All credit goes to Dr. Russell Sobel for this activity as it was his conception. I have just modified his original
version to add some additional options for instructors if they so choose to use them.
2
You can have them write anything you want them to remember. I usually go with the equation for price elasticity
of demand: %∆QD / %∆P because students often have trouble remembering whether price or quantity goes on top.
the relationship between marginal and average variables (when marginal is higher than the previous
average, the average will increase and when marginal is less than the previous average, the average will
decrease. Grade Point Average (GPA) is a way to relate this to students so that they can understand it.
One can also expand the size of the box and continue playing to show how the expansion of the fixed
amount of inputs in the long-run can increase productivity for a company who suffers from diminishing
marginal returns. I usually tell students about this rather than demonstrate it because of the constraints
on class time.
Discussion Questions:
1. What eventually happened to the total number of words written in the box as more and more
employees were added to the fixed amount of space? Did this number increase by bigger or
smaller amounts as more people were added? Why?
2. What could be done to enhance the productivity of the workers at the end of this
demonstration? Should the teacher add another variable resource (student) or should the
teacher expand the amount of fixed resources (size of the box)?