Initially the villagers can collect food only by hunting, gathering or fishing by the seashore. They can, however, use 150 units of wood to build a dock. It then becomes possible to create small fishing boats (for 75 units of wood each) that go fishing on their own, including in deeper water which villagers cannot reach without the boats. The building of the dock as well as the boats constitutes a first example of investing raw materials in creating capital, which then increases one’s productive capacity. Another interesting lesson introduced at this stage is the concept of diminishing returns. When too many villagers forage from a single bush, or when too many bring wood, stone or gold to the same storage camp, they often bump into one another, causing temporary delays. This is a classic example of diminishing marginal returns to labor given fixed capital, illustrated in an intuitive and self-explanatory way.That is from this paper by Jacob Assa. The title is "The Age of Models: Economic Lessons in Real-Time Computer Strategy Games."
Tyler Cowen talks here, among many other thins, about games as a tool to teach and learn econ.