Which of the Following Statements by a Restaurant Owner Refers

question 55

Multiple Choice

Which of the following statements by a restaurant owner refers to the law of diminishing marginal returns?

• A)"The higher the quality of the ingredients we use, the higher the cost of producing each meal."
• B)"If we double the size of our premises and double everything else - kitchen staff, serving staff, equipment - we can increase the number of meals we serve, but not to double the current levels."
• C)"We can increase the number of meals we serve by just adding more kitchen staff, but each additional worker adds less meals than the previous worker because traffic in the kitchen will get worse."
• D)"We can serve the same number of meals with fewer kitchen staff, but we would have to buy more labour-saving kitchen equipment."
• E)"We can serve the same number of meals with less kitchen equipment, but we would have to hire more kitchen staff."

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Definitions:

Borrowed Funds

Money that has been obtained through loans or issuance of debt, which must be repaid along with interest.

Going-Private Transaction

A going-private transaction involves the buyout of all of a publicly traded company's shares, resulting in the company becoming privately owned.

Borrowed Funds

Money obtained through loans, typically used for business ventures or investment with an expectation of repayment.

Incumbent Management

The current team operating and managing a company, particularly during an attempt of take-over or acquisition.