The Production Function for Laser Eye Surgery Is Given by Q

question 89

Multiple Choice

The production function for laser eye surgery is given by Q = 20K^0.5L^0.5, where Q is the number of laser eye surgeries performed per day, K is the number of eye surgery machines (which is fixed at 2 in the short run) , and L is the number of employees. The marginal product of labor for L = 2 is ____.

• A) 28.28
• B) 11.71
• C) 9.43
• D) 8.99

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Definitions:

After-Tax Cost

The actual cost of an expense or investment to a company or individual after accounting for the effects of taxes.

WACC

The Weighted Average Cost of Capital (WACC) refers to the average rate of return a company is expected to pay to its security holders to finance its assets.

Debt Ratio

The debt ratio is a financial metric that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Cost of Debt

The effective rate that a company pays on its current debt, included in capital structure calculations to assess overall cost of capital.