5.2.

2b Production Data Analysis

Procedure: 1. Open Microsoft Excel 2. Using your worksheet from our origami paper cup activity set up a table so that we can calculate the marginal Pro uct an !ost per unit. "our table shoul resemble the layout of the rows an columns on your worksheet. #. Put in a function to calculate your marginal product an use that function to auto calculate that column. $. Put in a function to calculate your cost per unit of marginal product an use that function to auto calculate that column. %. !reate ONE line graph to show the relationship between the number of workers an the following& a. 'otal Pro uction b. Marginal Pro uct c. !ost Per Unit of Marginal Pro uct Important Information: 1. Marginal Pro uct is the change in output that occurs when a unit of labor is a e (employee is hire ) 2. Marginal Pro uct can be calculate by subtracting the labor output from roun * from roun one+ the output from roun 1 from roun 2+ an so on. ,s an example say the pro uction occurre as follows in the four roun s& %+ 12+ 1-+ an 2*. .ote that if there is no labor there is no output. 'hen the first worker helpe a % units of output (5 minus 0). 'he secon worker a e - units of output (12 minus 5), the thir worker a e % units an the fourth worker a e # units. Diminishing returns set in with the thir worker in this example because the marginal pro uct ecline from - to % with the a ition of the thir worker. .ote the reason for this is that with only one pair of scissors only so much can be cut+ so a itional workers are probably waiting on patterns to be cut. 'hus+ a itional workers can/t a as much output as previous workers. #. !ost Per Unit of Marginal Pro uct takes what each employee (unit of labor) woul be paye an compares it to how much output was pro uce to fin out how much it costs to pro uce one unit of output. 0or example+ say each worker gets pai 1- uring the perio of pro uction. 2ince the first worker a e % units of output+ those units cost the company an a itional (in a ition to the cost of the scissors an the paper) 11.$* per unit of output ($7 divided by 5). 'he secon worker a e - units of output+ or a e output at 11 per unit of output ($7 divided by 7). 'he thir worker a e output at 11.$* per unit of output an the fourth worker a e output at a cost of 12.## per unit of output a e .

Conclusion

uestions !Please complete t"ese #uestions and t"e letter in $icrosoft %ord&:

1. 3hat factors of pro uction were use to pro uce the cups4 a. People+ materials+ tools+ energy an time

2. 3ith the a ition of what worker(s) i a. "es with two workers

iminishing returns occur4

#. 3hat happens to the cost per unit as iminishing returns set in4 a. 'he cost will go up

$. 3hy is it important for an entrepreneur to un erstan the concept of iminishing returns4 a. 5t is important because if they a more people the work is going to get one but it is going to be slow an might mess up.

%. 'he scissors that were use to cut out the cup origami pattern woul be an example of 6 A ,. labor 7. lan !. capital 8. entrepreneurship 9. 5f 1 worker pro uces a total of $ units of output+ 2 workers pro uce a total of 1* units of output+ # workers pro uce a total of 1: units of output+ $ workers pro uce a total of 2% units of output+ % workers pro uce a total of #* units of output+ an 9 workers pro uce a total of 2: units of output+ with the a ition of what worker o iminishing returns first occur4 A ,. worker 9 7. worker # !. worker $ 8. worker % -. 7riefly explain what the entrepreneur coul o to improve the pro uctivity of the a itional workers hire . Use complete sentences for your answer. 3hat entrepreneur can use is hire more people but split up the work loa like have three lines of people oing the same work. 'hey get the work one+ make more pro uct an it will go faster.

:. 3rite a letter to the owner of the cup factory explaining the concept of iminishing returns an then offer suggestions on how to improve the pro uctivity of the a itional workers hire . 2tu ents shoul apply the principles of six;trait writing to their letters.