Honda Motor Company is considering offering a $2,100 rebate on its minivan, lowering the vehicle's...
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Honda Motor Company is considering offering a $2,100 rebate on its minivan, lowering the vehicle's price from $29,800 to $27,700. The marketing group estimates that this rebate will increase sales over the next year from 40,500 to 53,700 vehicles. Suppose Honda's profit margin with the rebate is $5,360 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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