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  5. Lesson 04: "Robinson Crusoe"
  6. Why does Crusoe need to worry
Question 15 / 21:  Why does Crusoe need to worry about depreciation of his capital goods?
Answer: 

If Crusoe ignores the wearing away of the pole, he will experience

a sudden drop in his consumption. After going to the

trouble of investing in capital goods, Crusoe needs to maintain

them (by investing enough to offset depreciation) if he wants

to remain at his higher standard of living.
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Economy Foundations

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Attribution:  Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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