TL;DR: simplified: 1% chance = 10% damage, keeping them even gives double the bonus.
Your equation is correct. You start off with a base of 5% crit chance and +50% damage giving you effectively an average "effective damage" of 102.5% damage.
Adding 10% crit chance will always give you the same bonus to effective damage as +100% to crit damage disclaimer: this is only true when your critical chance and critical damage are proportionately equivalent (e.g. 5% chance of +50% damage, 10% chance of +100% damage, +20% chance of +200% damage).
However, I will show below how, from balanced values, it is twice as beneficial to get +10% crit chance and +100% to crit damage rather than just getting +20% in crit chance or +200% increased critical damage.
Example:
From base, lets say you add either 10% chance or 100% damage:
1 + ( 5% * 50% ) = 102.5%
1 + ( 15% * 50% ) = 107.5%
1 + ( 5% * 150% ) = 107.5%
Taking that example, if you add another 10% chance or 100% damage to what you already did... (adding +20% chance or +200% damage to base):
1 + ( 5% * 50% ) = 102.5%
1 + ( 25% * 50% ) = 112.5%
1 + ( 5% * 250% ) = 112.5%
But what if you added 10% to base and 100% to damage?
1 + ( 5% * 50% ) = 102.5%
1 + ( 15% * 150% ) = 122.5%
Conclusion:
Going for a mixed balance of critical chance and critical damage will provide higher damage output than maxing one or the other. Going from base values and adding 20% crit chance is equivalent to adding 200% crit damage, but adding 10% chance and 100% damage yields double the bonus to your "effective damage". From the example above, going from a base of 102.5% effective damage up to 112.5% or 122.5% is an increase of 10% or 20%.
Sidenote:
Be aware of what items can give you because you can get more value out of some items. For example... Gloves can give up to +10% chance and up to +50% to crit damage.
The best crit damage will come from weapons (up to +100% on weapon iteself with a socket of up to 100%). Theoretically with dual wielding you can get up to +650% damage on critical hits (not including unique bonuses from legendary items)...
If you have +0% crit damage on weapons, the highest you can get is only +250%.
Guide to Crit from items