Question
Honda Motor Company is considering offering a $ 1800 rebate on its minivan, lowering the vehicle's price from $30300 to $ 28500. The marketing group
Honda Motor Company is considering offering a $ 1800 rebate on its minivan, lowering the vehicle's price from $30300 to $ 28500. The marketing group estimates that this rebate will increase sales over the next year from 38500 to 53900 vehicles. Suppose Honda's profit margin with the rebate is $ 5910 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? Hint: View this question in terms of incremental profits.
The cost of the rebate will be $ ___ million. (Round to one decimal place.)
The benefit of the rebate will be $ __ million.(Round to one decimal place.)
Is it a good idea?____ Offering the rebate does look attractive.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started