## Abstract

In Chapter 1 the relationship between two variables

*y*and*x*was assumed to be linear and could be written Here

*a*is the*intercept term*, or the value of*y*when*x*= 0, and*b*is the*slope*or*gradient*, since if*x*increases by 1,*y*increases by*b*. For a linear function the slope is a constant. If the equation represents a cost function, with*x*as the level of output (where*x >*0) and*y*as the total cost, then*b*is the marginal cost of an extra unit of output. Here it is assumed that output and costs vary continuously so that the equation is valid for all positive values of*x*. We saw that the graph of such an equation is a straight line.## Preview

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## Copyright information

© K. Holden and A. W. Pearson 1992