PRC-3 · Chapter 12 · Question 17 of 69
A restaurant owner keeps hiring more waiters for a small dining room. The first few waiters improve service, but eventually, adding a 10th waiter causes them to bump into each other, and the extra meals served per waiter declines. This illustrates:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Law of diminishing marginal returns
Explanation
The law of diminishing returns states that adding more variable inputs (waiters) to a fixed input (the small room) will eventually yield progressively smaller marginal increases in output.
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