3.1 Power examples

A model for the cell phone subscribers: Subscribers = $C\, t^4$, where

C is the number of subscribers at time t = 1.

t is any time we are interested in. t = 0 is 1985.

Cost functions. $C\, D^{\eta}$, where

D is a cost driver.

C is a constant.

$\eta$ determines the rate at which costs increase as the driver increases.

Remarks on this cost function.

It's a ``power'' relationship - maybe fractional though.

Does it contain any fixed costs?

Always look at some special cases, $\eta = 1$ and $\eta = 0.5$.