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

question 31

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,the estimated cross-price elasticity of demand for cement relative to the price of asphalt is

• A)0.3
• B)0.6
• C)1.2
• D)3.0
• E)none of the above

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Definitions:

Average Cost

A method to calculate the cost per unit by dividing total costs of goods available for sale by the total units available for sale, used in inventory valuation.

Last-In, First-Out

An inventory valuation method that assumes the items most recently purchased or produced are sold first, leaving older inventory in stock.

Merchandise Sold

Merchandise sold refers to the products that a company sells to its customers, which can include anything from physical goods to software.

Purchases Made

Transactions involving the acquisition of goods or services by a company for the purpose of resale or for use in production.