Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,200. The marketing group estimates that this rebate will increase sales over the next year from 40,900 to 53,500 vehicles. Suppose Honda's profit margin with the rebate is $5,340 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 V look attractive. does not does
Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,200. The marketing group estimates that this rebate will increase sales over the next year from 40,900 to 53,500 vehicles. Suppose Honda's profit margin with the rebate is $5,340 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 V look attractive. does not does
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter14: Pricing Techniques And Analysis
Section: Chapter Questions
Problem 7E
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![Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,200. The marketing group estimates that this rebate will increase sales over the next year from 40,900 to 53,500
vehicles. Suppose Honda's profit margin with the rebate is $5,340 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
look attractive.
does not
does](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fccbe0e-690a-4599-ae28-c1fea38612a2%2F422bd26c-9d1c-4d59-a109-1d8ac77fcb6a%2Fp0mssx_processed.png&w=3840&q=75)
Transcribed Image Text:Honda Motor Company is considering offering a $1,800 rebate on its minivan, lowering the vehicle's price from $31,000 to $29,200. The marketing group estimates that this rebate will increase sales over the next year from 40,900 to 53,500
vehicles. Suppose Honda's profit margin with the rebate is $5,340 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
look attractive.
does not
does
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