Question
Honda Motor Company is considering offering a $ 2 comma 000$2,000 rebate on its minivan, lowering the vehicle's price from $ 30 comma 000$30,000 to
Honda Motor Company is considering offering a
$ 2 comma 000$2,000
rebate on its minivan, lowering the vehicle's price from
$ 30 comma 000$30,000
to
$ 28 comma 000$28,000.
The marketing group estimates that this rebate will increase sales over the next year from
40 comma 00040,000
to
55 comma 00055,000
vehicles. Suppose Honda's profit margin with the rebate is
$ 6 comma 000$6,000
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.)
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