3.3 The cost function revisited

Let's say C = 20, D = Labor hours (thousands), and look at various cases for $\eta$, so that $\mbox{\rm Costs} = 20\, D^\eta$:

$\eta = 1.25$.

$\eta = 1.00$.

$\eta = 0.90$.

$\eta = 0.75$.

Graphs of these cost functions. Key points:

If the exponent is greater than 1, then the relationship is growing faster than ``proportionally''.

If the exponent is less than 1, then it's growing slower than ``proportionally''

If the exponent equals 1 then it is proportional growth, that is linear.