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Ping Pong Ball Factory ManagerInvited students experience diminishing returns in this classroom exercise that has them delivering a familiar product in a production framework. Using Ping-Pong balls, have students deliver them from a starting bucket to a “final delivery” box given a 90 second time limit. Dropped Ping-Pong balls do not count in total production, and students can only transport one item at a time. The set-up of the game is important to the final outcome, but administering the game is simple and engaging. This is placed best in the middle of the marginal analysis lecture, right after explaining diminishing returns. Adding costs and prices gives students a sneak preview to the profit-maximizing rule. This has been effective in introducing students to the production side of microeconomics, which students typically struggle with initially.The procedure:Have one student volunteer to deliver Ping-Pong balls back and forth between buckets and a box. This initial student will serve as the firm’s “manager.” At one end of the classroom, place a bucket of Ping-Pong balls on a table, which will serve as their starting point. At the other end of the classroom, perhaps 20-25 feet away, place an empty paper box from your copy room. The first student will take one Ping-Pong ball at a time to the box, return to grab another Ping-Pong ball and deliver it to the box. This process continues for 90 seconds. Use a projector with a countdown timer and music to help motivate students a little more.Between rounds keep track of students and the total number of Ping-Pong balls delivered (total production). Have your manager select a classmate to help on round two. Explain to the students that whatever production technology decision they select, they must implement throughout the entire experiment. It helps to preempt the students and give them an example when they have more than two workers. Students typically want to avoid the assembly line initially, but illustrating the differences when they have multiple people will usually convince them to use the assembly line. If they chose an assembly line, they must always do an assembly line, but if they decide to have each worker deliver one ball without passing it along, they must always do this. If time allows, have a second group of students try the other technology method to see when diminishing returns begins. Allow the pair of students to deliver Ping-Pong balls for 90 seconds, and then add their total product to the board. Continue this method of recruitment followed by delivery until diminishing returns occurs. On a whiteboard or in an Excel file, calculate the marginal product of each additional worker. Start a discussion on marginal revenue and marginal cost by simplifying the math and assuming each Ping-Pong ball generates $1 in revenue, but each worker costs $10 to hire. The key take away for students is that even though 10 workers may deliver the most Ping-Pong balls, the 10th worker’s marginal revenue may only be $8, so they would not hire them, even though they contribute to a larger total product.Using iClicker technology, quiz the students after the first round to see where they think diminishing returns might occur. It helps integrate large classrooms of 100 when only 10-15 students might participate. Award bonus points based on which round the manager recruits the workers, which results in the manager receiving the most points and the last volunteer receiving the least. Materials:1 empty paper box – Usually free from your copy room144 ping pong balls - $102 gallon plastic industrial bucket (available at hardware stores) - $5Online timer or stopwatchImplementation:Implementation is easy because the necessary equipment should be readily available. Preferably a classroom with a wide front lecture space works best, but the experiment can be performed in a classroom with stairs, which requires students to slow down some. The online time is crucial because it lets the audience follow along, count down the final seconds, and encourages workers toward the end. Playing motivational music helps keep the audience from sitting in silence for the first minute of each round.Insight:Students should walk away more confident in their understanding of marginal analysis and diminishing returns. When the study of market structures and production are introduced in most principles classes, students are not familiar with the terminology. This project allows them to see diminishing returns actually occur. For students who have difficulty grasping the marginal analysis portion, going slowly through the marginal product of one additional worker helps students understand why the 7th worker might not be as productive as the 6th worker.I fully encourage instructors to associate a revenue and cost component into the exercise because it will be useful when moving into market structures. Students will assume that the firm should hire the number of workers that maximizes total product, but adding revenue and costs allows students to understand that the profit maximizing level is not always the level that produces the most product.* I have found that students really enjoy the Rocky theme song.
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