(b) Independent Variables Two types of factors affect cost levels: (1) those related to the output, such as number or frequency of trains or buses, number of trips, tons of material shipped, passenger-miles, vehicle-miles, or ton-miles (these are referred to as output variables) and (2)those independent of output, such as spatial location. Output-related variables typically constitute the variable component of a cost function, while the nonoutput variables typically comprise the fixed component. Examples of output variables typically used in cost functions or rates for capital costs of physical transportation infrastructure are shown in table 4.1.
(C) Functional form Nonlinear functional forms, which include quadratic, cubic, exponential, logarithmic, and power forms, are generally more appropriate than linear forms, as they are capable of accounting for scale economies or diseconomies.