Build-Right Concrete Products Produces Specialty Cement Used in Construction of Highways.Build-Right

Multiple Choice

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: $Q = a P ^ { b } M ^ { c } P _ { R } ^ { d }$ where Q = yards of cement demanded monthly,P = the price of Build-Right's cement per yard,M = state tax revenues per capita,and $P _ { R }$ = 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: Given the above,if the price of asphalt ( $P _ { R }$ ) decreases 20%,the estimated quantity of cement demanded will:

A) increase 12%
B) increase 6%
C) increase 1.2%
D) decrease 12%.
E) decrease 1.2%.