Appendix

Popsicle Sticks, Inc.: Procedures for the Professor

This experiment is designed to precede any discussion of production functions or costs of production. You should distribute the "Instructions to the Students" that appear below during the class period before you perform the experiment. That way the students can begin to think about the production process and efficiency in performing their tasks. However, the blank copy designated as Table 1 from the paper should not be distributed until after the experiment has been completed.

Materials for use in the experiment should be available in a craft store at nominal cost. The standard box of popsicle sticks should last many semesters, and double-sided tabs come in many shapes and types of packages. To reduce your costs, choose tabs that have peel off fronts and backs, but that are near the size of the width of the popsicle sticks. They are cheaper per square inch.

The number of groups employed will depend on the size of your class, but the progression discussed above assumes groups of nine (plus one inspector per group). Groups much bigger than this will become cumbersome, and smaller groups prohibit the progression outlined. However, group size can be quite flexible. Odd numbers of students could be assigned as additional inspectors, or you could separate the inspector function from the recording of results, giving the "reward" to the latter students regardless of which group maximizes its profits (for the more risk-averse students). You can also employ a timekeeper or monitors to guarantee fair practice by the groups (no cheating). Naturally, having more than five groups requires adjustments in the tables provided, and will mandate additional construction materials.

Less is more in terms of your involvement in this process. The instructions below outline what the students need to know, so your function during the experiment is to keep track of the time in the class period and to look for issues to address in the follow-up analysis.

Allot at least ten minutes prior to the first round, and up to five minutes between rounds. It will be of assistance to the students if you count down the time as it approaches the three minute limit during the construction periods. If you follow this schedule, you will be able to complete the experiment in a 50 minute class, and in a 75 minute class you can also begin to complete Table 1 beyond what the inspectors record between rounds.

Between the experiment class and the evaluation class, thoroughly review the results for conformity with microeconomic theory. You may want to graph the production and cost curves so that they can be displayed for the class, and if the capability exists, enter the results into a plot program so that the graphical presentation can be spontaneous. If your students react like mine, they will be anxious to return to class to find out who won, and also to discover how effectively the experiment delineated the microeconomic theory you were trying to teach.

Popsicle Sticks, Inc.: Instructions to the Students

There will be five rounds of production in this experiment where each group will be producing popsicle stick squares. The squares will need to be assembled and transported to inspectors who will provide quality control. If an inspector rules that the square is defective, no revenue will be earned from that unit (although the costs will clearly be incurred).

Production Specifications:

1. The squares must be attached at all four corners with sticky tabs and be relatively square. The tabs must not stick out beyond the width of the popsicle sticks.

2. They must be in this condition upon arrival at the inspector’s station.

3. Tabs must be cut with the scissors, not torn.

Costs of Resources:

1. Desks cost $1.00 and each group must use one and only one desk.

2. Scissors cost $0.50 per pair, and only one pair may be used.

3. The popsicle sticks cost $0.10 per stick.

4. The tabs cost $0.05 per corner regardless of the size of the tab used (however, see #1 above).

5. Labor is paid wages of $0.40 per worker, per round.

Number of Workers Per Round:

In the first round only one worker may be involved in production. In the second round two workers may participate. In the third through fifth rounds four, six, and eight workers (or the entire group -- whichever is appropriate) respectively, may participate. It is up to you to determine how to use these resources. YOU NEED NOT USE THE MAXIMUM NUMBER OF WORKERS PER ROUND.

Who Wins:

The group that generates the largest profit or smallest loss (TR - TC) wins the experiment and reaps the reward. Assume that each acceptable square can be sold for $2.00, and the market will purchase all of the squares produced by all of the groups at that price.