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What are its costs and benefits

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

Reference no: EM132938092

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