econsalon: Macro Question: February 2nd

econsalon: Macro Question: February 2nd: "How would you explain the concept of diminishing marginal productivity of capital to a 5th grader? (Remember: 5th graders are pretty smart..."

I would explain the concept of diminishing marginal productivity of capital to a 5th grader in terms of a sand castle. If you want to build a sand castle in your playground sandbox you collect and pile up all the sand that is possible in the sandbox and begin to build. As the castle takes shape (and it is taking shape nicely) you decide you want more sand to keep building and expanding the castle, which is attracting onlookers. You decide to go to the playground next door and take sand from that sand box to make your castle even bigger, to please the swelling onlookers and admirers. You manage to collect an additional three buckets of sand to continue building and expanding your castle. The castle is looking great, getting better, bigger, and attracting even a larger crowd of playground onlookers. You decide to add more sand to make the castle even bigger, so you go get three more buckets of sand. Only, when you return to the sandbox, you realize you are running out of room to expand and increase the castle and production and building begin to decrease, along with the onlookers. There is just no more room in the sand box for more sand to continue production and expand the castle. All that sand that you labored to dig out, transport, and deliver, was all for not since that sand is now useless to continue building. Sure the castle was shaping out great, getting bigger and better with every bucket of sand, but as more and more sand was brought in to expand the castle, the limit of what the sandbox could hold was reached, and no remaining amount of sand could alleviate that. As a matter of fact, the construction and building of the castle slowed then decreased completely causing the interested onlookers to disperse. This simple explanation might help a 5th grader understand the concept diminishing marginal productivity when an input is increased in a fixed unit, where initial increases in marginal gains are attained but in time the increase in productivity diminishes; even into the negative possibly.