Question

If a firm starts with K_1 of capital at the beginning of period 1, it will, by the end of period 1:

a. be reduced to dK_1
b. be reduced to (1-d)K_1
c. be reduced to K_-

Answer 1

If a firm starts with K_1 capital, at the end of period 1, factoring in depreciation, it would have (1-d)K_1 amount of capital remaining.

Step-by-step explanation:

The student asked what would happen to a firm's capital at the end of period 1, given that it starts with K_1. The question seems to be pertaining to the concept of depreciation in economics, where 'd' represents the depreciation rate. If the firm starts with K_1 capital at the beginning of period 1, by the end of period 1 the capital would be reduced to (1-d)K_1, considering that dK_1 has been depreciated.

Assuming 'd' is the rate of depreciation, (1-d) represents the remaining percentage of the initial capital that is not depreciated. Thus, the capital after depreciation at the end of period 1 would be the initial capital K_1 times (1-d), indicating the remaining capital after depreciation.