|Question||Hester’s Hatchery raises fish. At the end of the current season she has 1,000 fish in the hatchery. She can harvest any number of fish that she wishes, selling them to restaurants for $5 apiece. Because big fish make little fish, for every fish that she leaves in the hatchery this year, she will have two fish at the end of next year. The price of fish is expected to be $5 each next year as well. Hester relies entirely on income from current fish sales to support herself.
a. How many fish should Hester harvest if she wants to maximize the growth of her stock of fish from this season to next season?
b. Do you think maximizing the growth of her fish stock is an economically sound strategy for Hester? Why or why not? Relate to the text discussion on the costs of economic growth.
c. How many fish should Hester harvest if she wants to maximize her current income? Do you think this is a good strategy?
d. Explain why Hester is unlikely to harvest either all or none of her fish, but instead will harvest some and leave the rest to reproduce.