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Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,100. The marketing group estimates that
Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle's price from $30,100 to $28,100. The marketing group estimates that this rebate will increase sales over the next year from 42,000 to 54,400 vehicles. Suppose Honda's profit margin with the rebate is $5,260 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? does or does not Offering the rebate ____ look attractive
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