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. Explain how this business could experience diminishing marginal returns in the short run of café...

. Explain how this business could experience diminishing marginal returns in the short run of café shop?

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Answer #1

A short run for a cafe shop will be a time period where they cannot expand the building or the capital assets that they have like the furniture or other interiors etc.

To experience a diminishing return the firm will have to increase the number of workers they have in the cafe keeping all the above mentioned variables as constant. If the cafe have the same building, same menu and same interiors and they hired many more labor the place will become crowded and experience diminishing return.

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