Should the club cover explicit and implicit costs? Imagine that you are asked to consult with a drama club that puts on a play every year. The club asks you: How much should we charge for tickets if we want to cover our costs? You begin by listing the club's explicit costs and implicit costs and then make a recommendation whether ticket prices should cover the explicit costs, the implicit costs or both explicit and implicit costs. Give the club three examples of each type of cost. | Explicit costs | Implicit costs | | 1. | 1. | | 2. | 2. | | 3. | 3. |
What is your recommendation for ticket pricing: should they cover explicit costs, implicit costs, or both? Why? |