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For a consumer product, the manufacturers suggested retail price (MSRP) is $20.00. The wholesale price from the manufacturer to the retailer is $13.00. The manufacturer

For a consumer product, the manufacturers suggested retail price (MSRP) is $20.00. The wholesale price from the manufacturer to the retailer is $13.00. The manufacturer faces a marginal cost of $9.00 per unit to produce.

The marketing manager for the manufacturer believes her firm and the retailer should both absorb some of the burden associated with a promotion. If you were in her position, what do you think would be a fair way for the two firms split the costs of the $2 off sale offered to customers at retail?

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