Honda Motor Company is considering offering a $1,600 rebate on its minivan, lowering the vehicle’s price from $29,000 to $27,400. The marketing group estimates that this rebate will increase sales over the next year from 42,000 to 60,000 vehicles. Suppose Honda’s profit margin with the rebate is $5400 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea?

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