Tennis Ball Game: Theory of the Firm

On Friday, December 7, 2010, the IB HL Economics 1 class had a game that required students to “produce” tennis balls by carefully placing tennis balls from one bucket to another.  This simple game reflected three concepts of economics: the law of increasing return, the law of constant return, and the law of diminishing return.  In this beginning, the total product increased significantly as we added an extra worker. This reflects the law of increasing return, meaning as extra units of labor were added, the increase in the quantity of product produced was greater than the increase in the quantity of labor.  Then, as the quantity of labor reached to about 4-5 (in the middle), there was the law of constant return, meaning as extra units of labor were added, the quantity of product that was produced remained fairly constant.  Lastly, near the end of the game, as the quantity of labor reached to about 8-9, there was the law of diminishing return, meaning as extra units of labor were added, the quantity of product that was produced diminished.

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