1. US Auto Company would like to offer rebates to its customers in order to increase sales. If it lowers prices sales wi

[answerhappygod]

1. US Auto Company would like to offer rebates to its customers
in order to increase sales. If it lowers prices sales will
increase. This will depend on the price elasticity of demand.
Assume that the price elasticity of demand is 1.5. This firm is
considering a $400 rebate on its cars.
Also assume the following information on prices and costs before
the rebates:
Average
price per
car
$9,000 per car
Expected
sales volume at $9,000) per car 1,000,000
cars
Average
total costs per
car
$8,200 per car
Total
variable
cost
$6,400,000,000