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Honda Motor Company is considering offering a $ 1,800 $1,800 rebate on itsminivan, lowering thevehicle's price from $ 31,000 $31,000 to $ 29,200 $29,200 .
Honda Motor Company is considering offering a $ 1,800
$1,800 rebate on itsminivan, lowering thevehicle's price from $ 31,000
$31,000 to $ 29,200
$29,200. The marketing group estimates that this rebate will increase sales over the next year from 38 comma 300
38,300 to 54,200
54,200 vehicles. SupposeHonda's profit margin with the rebate is $ 5,080
$5,080 per vehicle. If the change in sales is the only consequence of thisdecision, what are its costs andbenefits? Is it a goodidea?Hint: View this question in terms of incremental profits.
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