A business owner should understand the total costs, or expenses, of running the business. A cost is anything that the company spends money on. Costs can be fixed or variable. A variable cost is a cost that changes relative to the number of units sold. For
example, the cost of the materials used to make jeans is a vanable cost. It goes up or
down based on your sales (Commission paid to salespeople is also a variable cost that will be discussed later) The business is presently spending m = $40 to buy raw materials (e. g., denim, stitching, beads, and sequins) to make each pair of designer jeans. Take
some time to vary the value of m What happens if I climbs to $105 or higher? What
happens if the raw materials are free of charge? Describe the situation in terms of the
slope of the curves and the profitability of the business. Assume b = $8,000 and d = $125.