Question
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
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 41,400 to 54,500 vehicles. Suppose Honda's profit margin with the rebate is $6,310 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 decimalplace.)
The benefit of the rebate will be ___________ million.(Round to one decimal place.)
Is it a good idea?(Select from the drop-down menu.)
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