Question

Hester’s hatchery raises fish, and she can harvest any number of fish, selling them for $5 each. For every fish left in the hatchery, she will have two at the end of the next year. What is the opportunity cost of leaving one fish in the hatchery this year?

a. $5
b. $10
c. $15
d. $20

Answer 1

The opportunity cost of leaving one fish in the hatchery is $10 since each fish will result in two fish next year, each selling for $5.

Step-by-step explanation:

The question is about calculating the opportunity cost of leaving one fish in Hester's hatchery. If Hester sells a fish today, she earns $5. However, if she leaves the fish in the hatchery for one more year, it will reproduce, and she will have two fish that she can sell for $5 each the next year. Therefore, the opportunity cost of leaving one fish in the hatchery this year is the future value of those two fish, which is $10 ($5 per fish multiplied by 2). Hence, the correct answer to the question is b. $10.