Materials Needed:

Sheets of construction paper; two pairs of scissors, two staplers, 6 friends or family members

How to Make a Paper Chain:

1. Cut strips about 1 inch wide from the construction paper. Form a loop or circle with one strip and staple it together.
2. Insert a second strip through the first loop, form the second strip into a loop, and staple. The two loops should be interlocking

Product Specs

1. Land resources: Your table is your factory floor. The paper is a raw material. Capital resources: Equipment includes two staplers and two pairs of scissors. Labor: Your group of 6-8 workers.
2. The longer your chain, the more productive your factory and its workers are.
3. The goal of your paper chain factory, of course, is to make the longest chain possible in a fixed amount of time using a fixed amount of land and capital, with labor as your only variable resource.

Costs of Production

1. The staplers, scissors and paper cost $20 total.
2. Labor is paid a wage of $10 per worker, per round.
3. You might consider the impact of waste, and charge $0.50 for each unused strip.

Firms and Labor

1. Each firm will consist of 6-8 individuals. All eligible workers in each round are paid, whatever their task.
2. Production will take place over 60 second rounds.
3. In the first round, only one worker participates in production.
4. In the second round, two workers participate in production.
5. One successive worker is added in each round.

Production

1. In round 1, the first worker has one minute to cut and staple as many links into one paper chain as he or she can. At the end of a minute, the recorder will count the number of links in the chain, record it in the production table, and then remove the chain and any links that were cut but not stapled from the production area in preparation for the next round.
2. The goal is to make as long a chain as possible in 60 seconds.
3. A second worker is added for round 2. The two work together for one minute to make as long a chain as they can.Again, the recorder will count the number of links in the chain at the end of one minute, record this under "total product", then remove the chain and any unstapled links from the table.
4. You cannot cut extra strips and save them for a subsequent round.
5. Production will continue for eight rounds with one worker added each round.

Worksheet to use during production:

ROUND	1	2	3	4	5	6	7	8	9	10	11	12	13
Number of workers
Chain length (Total Product)
Excess Strips

ANALYSIS OF PRODUCTION AND COSTS

FIXED COST (Stapler, Scissors & Paper) = $20 LABOR COST = $10/WORKER

1) TP and MP, 2) FC, TVC, and TC and 3) MC, ATC, AVC and AFC. draw a graph by selecting appropriate parameters

ROUND

CHAIN LENGTH (TOTAL PRODUC)

NO. OF WORKERS

AVERAGE PRODUCT

MARGINAL PRODUCT

FIXED COSTS

COST OF LABOR

COST OF WASTE

TVC

TC

AFC

AVC

ATC

MC

1

2

3

4

5

6

7

8