Exponential decay formulas use an initial amount, a decay factor, and time to model how a quantity decreases over time. The document provides the formula y=a*b^x, where a is the initial amount, b is the decay factor less than 1, and x is time. It gives examples of using the formula to model radioactive decay from cancer treatment over time and decreasing milk consumption in the US each year since 1975, which has decreased by 4.5% annually.