Journal Topic 14 - Productivity Experiment

Journal Topic 14 - Productivity Experiment
The experiment that we did in class on Friday was pertaining to the laws of diminishing returns. We basically ran a pseudo-company which was supposed to imitate the decision making of the firm. We started with 1 worker and recorded how many widgets he could make in a minute. The next time we had 2 workers and recorded how many widgets that they could make in a minute. We kept doing this until all the students except for the quality control person and the manager were workers. The capital remained the same throughout the process. There were a few not idealistic discrepancies in the data. For example, on one work time compared to the next, the output decreased despite the increase in labor, even though after that session of work, the output would increase. The major trend was that as labor increased with capital remaining the same, the marginal average product would increase until a certain point, and then the marginal average product would start to decrease. This experiment thus showed the law of diminishing returns. In the short run, the company could have reallocated its labor force, putting more people into rolling the paper and stapling it. In the long run, we could have bought more capital, which would include another table, more scissors and more staplers.