Name: __________________________________________ Date: ___________________________

Business Math
Exponential Growth and Decay
Examples of growth and decay abound in our daily lives and academic research. When these growth and
decay patterns show a certain trend, they are classified as exponential growth and decay.

Bacterial growth provides a context in which this exponential trend is observed. Imagine an experiment
where 1,000 bacteria are present initially, and the number of bacteria doubles every hour. So, at the end of
one hour, there are 2,000 bacteria; at the end of two hours, 4,000 bacteria; at the end of three hours,
8,000 bacteria. The bacterial growth in this experiment is modeled by the exponential
function f(x)=1000×2x, where x refers to the number of hours since the experiment started. Since the base
of x (2) is greater than one, this indicates that the bacteria are increasing exponentially. If they are
decreasing exponentially, the base of x will be less than one.

OBJECTIVES

 Identify percent rate of change in functions.

 Classify functions as representing exponential growth or decay.
 Solve applied problems involving exponential growth and decay.

 VOCABULARY

a decrease in a quantity that can be modeled by a decreasing

exponential decay
exponential function

an increase in a quantity that can be modeled by an increasing

exponential growth
exponential function

1. The population in Mittsville since 2000 is modeled by the function 𝑃(𝑥) = 20000 × 0.93𝑥 ,
where x refers to the number of years since 2000. Complete the following sentence. The population has
been (decreasing, increasing) every year.
EXPONENTIAL GROWTH AND DECAY

A population change in Mittsville involved a factor of 0.93. This factor, 0.93, could be interpreted as 93%. If
93% of the population remain after one year, then the population has decreased by 7%. Can this pattern
be generalized to any number of years, so that the resulting function will reflect the population when the
number of years is substituted as the input?

Exponential decay refers to a function where the rate of change of the value of a function is proportional
to the current value of the function and this rate is less than 1. So when the amount decreases
by r percent, we have exponential decay.

On the other hand, exponential growth entails a function where the rate of change of the value of a
function is proportional to the current value of the function and this rate is greater than 1. Thus, if there is
an r percent increase, we have exponential growth.

Key Point!
Recall that exponential functions of the form, 𝑓(𝑥) = 𝑎 × 𝑏 𝑥 require that 𝑎, 𝑏 > 0 and 𝑏 ≠ 1. The graph of
an exponential function is increasing when 𝑏 > 1 and decreasing for 0 < 𝑏 < 1. Growth is related to an
increasing function and decay is related to a decreasing function. Just as with percentages, any exponential
function with a base greater than 1 models exponential growth, whereas any exponential function with a
base less than 1 models exponential decay.

To decide whether an exponential function models growth or decay, it is important to look at the value of
the base. For instance, consider the exponential function for the number of subscribers to a certain
magazine, 𝑆(𝑥) = 5,000 × 2𝑥 , where x denotes the number of weeks since the new year. This is a model
of exponential growth since the base, 2, is greater than 1.

According to this model, the number of subscribers doubles every week. On the other hand, the
8
exponential function for the price of a sweater is 𝑃(𝑥) = 50 × (9)𝑥 , where x denotes the number of
8
months since July. This is a model of exponential decay since the base, 9, is less than 1. According to this
1
model, the price of the sweater decreases every week by 9 of the price from the previous week.

2. The population in Changins since 2015 is modeled by the function 𝑃(𝑥) = 40000 × 1.2𝑥 ,
where x refers to the number of years since 2015. Complete the following sentence.
The population has been (increasing, decreasing) by (120, 20 12, 1.2, 2, 0.2) percent every year.
3. Which of the following are functions that represent exponential decay? Select all that apply.

2𝑥
𝑓(𝑥) = 2 × 3

ℎ(𝑥) = 3 × 0.4𝑥
1𝑥
𝑘(𝑥) = 6 + 2
1
𝑡(𝑥) = 5 × 2𝑥

𝑔(𝑥) = 8 + 3.4𝑥

4. Write an exponential growth function and explain the growth pattern it models. Use complete
sentences.
APPLIED EXPONENTIAL GROWTH AND DECAY PROBLEMS

Exponential functions have relevance in many real-life contexts. For instance, take carbon dating, an
important method for dating archaeological artifacts. The half-life of the Carbon-14 isotope is
approximately 5,730 years. In 5,730 years, half of the original amount of Carbon-14 will remain. In 11,460
years, one quarter of the original amount of Carbon-14 will remain. In 17,190 years, one-eighth of the
original amount of Carbon-14 will remain. If an artifact is known to contain A grams of Carbon-14 at the
𝑥
1 5730
time of its creation, then it will have 𝐶(𝑥) = 𝐴 × (2) grams of Carbon-14 remaining x years after its
𝑥 1
creation. Here, 5730 refers to the number of 5,730-year intervals for each of which the decay factor of 2 is
applied.

The number of viewers of a social-media video could also be modeled with exponential functions. Imagine
the scenario where the number of viewers of a recently uploaded video doubles every three days. Let's say
four people watch the video at the time of the upload. If the task is to write a function for the number of
viewers x days after the upload, the first thing to realize is that this is an exponential growth function.
Taking the base as 2, the exponent should model the number of three-day intervals. As the number of
𝑥
intervals of three days is 3, this is going to be the exponent in the exponential function. So the function is

𝑥
𝑓(𝑥) = 4 × 23 .

5. A car is purchased for the price of $7,000. After two years, the value of the car has decreased to
$3,937.50. Which exponential model represents the value of this car x years after purchase?
a. 𝑃(𝑥) = 3937.5 × 0.5625𝑥 b. 𝑃(𝑥) = 7000 × 0.75𝑥
c. 𝑃(𝑥) = 7000 × 0.56252𝑥 d. 𝑃(𝑥) = 7000 × 0.752𝑥

6. The amount of Carbon-14 in a wooden spoon found at an archeological site is 2.1 grams. Spoons of
this type are known to contain 10 grams of Carbon-14 at their time of creation, and the amount of
𝑥
1 5730
Carbon-14 x years after the creation of this artifact is modeled by 𝐶(𝑥) = 10 × (2 ) . How many years
ago was this spoon made?
a. 27,285.1 years b. 12,901.4 years
c. 2,641.5 years d. 6,133.3 years
LET'S REVIEW!

The idea of exponential growth and decay is closely related to the increasing and decreasing behavior of
exponential functions. An exponential function is a function of the form f(x)=a×bx, where a,b>0 and b≠1.
Given r as our percentage for growth, we model with an exponential function with base b=1+r100. If r is
our percentage for decay, we model with an exponential function with base b=1−r100. A function of the
form f(x)=a×bx models exponential growth if b>1 and exponential decay if 0<b<1.

Now, put the knowledge to the test with this memory activity.

Match each function or expression with the correct feature.

Exponential growth by a factor of 3

Doubling every 3 days

Decrease by 3%

Reduction by a half every 3 days

Increase by 3%

Exponential decay by a factor of 0.3

7. The population of a town was 26,000 in 2015 and 30,000 in 2017. Assuming an exponential model,
what is the annual percentage increase in the population?

a. 15.4%
b. 13.3%
c. 7.4%
d. 5.8%

8. Match the description with the correct amount for an isotope that has a half-life of 25 days.

1. Start with 1,000 grams, find the amount after 100 days. 50 grams

2. Start with 400 grams, find the amount of after 75 days. 62.5 grams

3. Start with 300 grams, find the amount of after 50 days. 75 grams

4. Start with 200 grams, find the amount of after 25 days. 100 grams