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Honda Motor Company is considering offering a $1,900 rebate on its minivan, lowering the vehicle's price from $29,800 to $27,900. The marketing group estimates that
Honda Motor Company is considering offering a $1,900 rebate on its minivan, lowering the vehicle's price from $29,800 to $27,900. The marketing group estimates that this rebate will increase sales over the next year from 40,700 to 56,300 vehicles. Suppose Honda's profit margin with the rebate is $6,300 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? (Select from the drop-down menu.) Offering the rebate (1) look attractive. (1) does not does
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