1. A pair of shoes that wholesales for $28.79 has approximately the following costs:

a. Which of these costs would likely be a variable cost?

b. Which would likely be a fixed cost?

c. If output were to rise, what would likely happen to average total costs? Why?

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Manufacturing labor $2.25 Materials 4.95 Factory overhead, operating expenses, and profit 8.50 Sales costs 4.50 Advertising 2.93 Research and development Interest 2.00 .33 Net income to producer 3.33 Total $28.79