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    Implicit and Explicit costs

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    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?

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    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 ...