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Honda Motor Company is considering offering a $1,900 rebate on its minivan, lowering the vehicle's price from $29,200 to $27,300. The marketing group estimates that
Honda Motor Company is considering offering a $1,900 rebate on its minivan, lowering the vehicle's price from $29,200 to $27,300. The marketing group estimates that this rebate will increase sales over the next year from 40,900 to 55,500 vehicles. Suppose Honda's profit margin with the rebate is $6,470 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.) You are an international shrimp trader. A food producer in the Czech Republic offers to pay you 2.2 million Czech koruna today in exchange for a year's supply of frozen shrimp. Your Thai supplier will provide you with the same supply for 3.1 million Thai baht today. If the current competitive market exchange rates are 25.79 koruna per dollar and 40.82 baht per dollar, what is the value of this exchange to you? The cost of the shrimp from the Thai supplier in dollars is $ (Round to the nearest cent.)
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