Build-Right Concrete Products produces specialty cement used in construction of highways. Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form:Q = aPbMc
where Q = yards of cement demanded monthly, P = the price of Build-Right's cement per yard, M = state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: 
height="198" width="577" />Given the above, if the price of asphalt (PR) decreases 20%, the estimated quantity of cement demanded will:
A. increase 1.2%
B. increase 12%
C. decrease 1.2%.
D. decrease 12%.
E. increase 6%
Answer: D
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A) set a higher price. B) maintain the current price. C) set a lower price. D) implement new technology. E) increase the barrier to entry that protects it.
What would happen in a free market system when production of a good generates negative externalities?
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Which of the following is correct?
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