A firm has 100 computers, and each year 5 of them become obsolete and must be recycled. This firm is in a steady state if investment each year is equal to
A) 0.
B) 5.
C) 1.
D) 100.
E) 95.

Question

Quizplus · Accepted Answer

In a steady state, the firm replaces the obsolete computers to maintain the same number of computers. Since 5 computers become obsolete each year, the firm must invest in 5 new computers annually to maintain the steady state.

A Firm Has 100 Computers, and Each Year 5 of Them