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. What is your recommendation for ticket pricing: should they cover explicit costs, implicit costs, or both? Why?© BrainMass Inc. brainmass.com October 25, 2018, 2:53 am ad1c9bdddf
Explicit cost: cost of renting theatre, cost of props and costumes and cost of equipments (such as lighting, sound system etc.)
Implicit cost: the opportunity cost of actors (in other words, say if they decided to leave the club and teach at a school, then what they make from ...
Explicit Cost, Implicit Cost or Not Needed to Be Reflected
Tom total revenue from his cafe is 50000/ yr, he bought a coffee machine costing $5000 with ($2000 of which is his savings which the bank gave him an interest rate of 5% and $3000 is a loan from the bank which the rates is 10%). If he work as a sales man he can earn $30000 /yr. What is his explicit and implicit cost.
I know that the (5% of 2000) is implicit cost.
$30000 + (10% of 3000) is the explicit cost.
However i am confuse. Do i need to add the cost of the machine of $5000 to explicit or implicit cost? Or i don't have to place this value any where.View Full Posting Details