As a member of a local advocacy group for low-income families, you have been placed in charge of organizing a one-day seminar on welfare reform. The costs of the event are as follows:
Rent for auditorium: $5,000
Faculty: $2,500
Breakfast: $10 per person
Luncheon: $15 per person
Materials: $25 per person
Advertising: $1,500
a) What are the average variable costs of the seminar?
b) What are the fixed costs of the seminar?
c) Based on past events, you expect that 100 people will attend the seminar. What price should you charge each attendee so that the seminar breaks even? (Hint: to break even, the price must equal the average total cost. It is different from the shut-down decision where the price needs to be at least as high as an average variable cost)
d) To encourage more young people to get involved, your supervisor suggests charging students a discounted rate. You decide to have students pay only the marginal costs of their attendance. What price should you charge students to attend the seminar?
As a member of a local advocacy group for low-income families, you have been placed in charge of organizing a one-day seminar on welfare reform. The costs of the event are as follows:
Rent for auditorium: $5,000
Faculty: $2,500
Breakfast: $10 per person
Luncheon: $15 per person
Materials: $25 per person
Advertising: $1,500
a) What are the average variable costs of the seminar?
b) What are the fixed costs of the seminar?
c) Based on past events, you expect that 100 people will attend the seminar. What price should you charge each attendee so that the seminar breaks even? (Hint: to break even, the price must equal the average total cost. It is different from the shut-down decision where the price needs to be at least as high as an average variable cost)
d) To encourage more young people to get involved, your supervisor suggests charging students a discounted rate. You decide to have students pay only the marginal costs of their attendance. What price should you charge students to attend the seminar?
