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 = aPbMcwhere 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

Economics

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