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You have one minute to create as large of a paper chain as you can. We will record your production (how much output ). . Activity. Now we will add a worker to help you make as large of a chain as possible in 1 minute.

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  1. You have one minute to create as large of a paper chain as you can. We will record your production(how much output). Activity
  2. Now we will add a worker to help you make as large of a chain as possible in 1 minute. So the amount of labor increases by 1, but you still have the same amount of capital to create the chain. Let’s add a worker Predictions?
  3. Same story as last time. Predictions? Let’s add another worker
  4. Do you notice something going on? Why do you think that it? What might happen if we add another laborer? Let’s check the board
  5. By: Mr. Brady

    Laws of Production:

  6. In economics—Margin means additional. So with respects to production (how much of an item a company will produce), economists “Think on the margin” and consider how much benefit (or utility) they will receive from adding an extra unit. Thinking on the Margin
  7. Businesses can increase output by hiring more workers. The change in output resulting from adding one more worker is the marginal product of labor. (how much more output (product) they gained from adding one more laborer. Thinking at the margins is deciding whether to add or subtract one additional unit. The Marginal Product of Labor
  8. Hiring a worker may increase production.
  9. When you hire 1 additional worker, 2 things can happen. 1. Increasing Marginal Return—Whenthe additional worker can produce more Product at a greater rate than previously. For example, if we went from 10 chains round 1, to 25 chains round 2. 2 Types of Returns:
  10. Increasing marginal returns occurs when hiring one additional worker increases production. Ideally, hiring one additional worker will lead to greater efficiency and production. Producers want to increase production. Increasing Marginal Returns
  11. Increasing marginal returns occurs when hiring one additional worker increases production.
  12. The "law of diminishing returns" states that adding additional amounts of labor to a fixed amount of capital will eventually reduce labor’s rate of product. What is capital? Law of Diminishing Return Tools or money necessary to make a product.
  13. Too many workers only get in each other’s way.
  14. The Law of Diminishing Returns states that as one input variable is increased, there is a point at which the marginal increase in output begins to decrease, holding all other inputs constant. At the point where the law sets in, the effectiveness of each additional unit of input decreases. This does not mean that output decreases; output begins to increase at a decreasing rate for each additional unit of input. There can be a point at which output beings to decline; this is referred to as negative returns. Law of Diminishing Return
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