Method of compensating the wait staff


Problem: In most restuarants, waiters receive a large portion of their compensation through tips from customers. Generally, the size of the tip is decided by the customer. However, many restaurants require a 15% tip for parties of 8 or more.

Q1. why the practice of tipping has emerged as a major method of compensating the wait staff

Q2. why the customer typically decides on the amount of tip?

Q3. why restaurants require tips for large parties?

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Managerial Economics: Method of compensating the wait staff
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