Use the Table for the Question(s)below

question 20

Multiple Choice

Use the table for the question(s) below.
Consider the following prices from a McDonald's Restaurant:
-A McDonald's Big Mac Extra Value Meal® consists of a Big Mac Sandwich,Large Coke,and a Large Fry.Assume that there is a competitive market for McDonald's food items and that McDonald's sells the Big Mac value meal for $4.79.Does an arbitrage opportunity exist and if so how would you exploit it? How much would you make on one extra value meal?

• A)Yes,buy the Big Mac Extra Value Meal® and then sell Big Mac,Coke,and Fries to make arbitrage profit of $0.68.
• B)No,no arbitrage opportunity exists.
• C)Yes,buy Big Mac,Coke,and Fries then sell the Extra Value Meal® to make an arbitrage profit of $1.09.
• D)Yes,buy a Big Mac,Coke,and Fries then sell the Extra Value Meal® to make an arbitrage profit of $0.68.

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Definitions:

Public Scrutiny

The examination and critical observation of an individual, company, or process by the general public, often facilitated by media outlets.

Average Workers' Pay

The mean wage earned by employees in a specific job, industry, or region, calculated by dividing total wages by the number of workers.

Pay Structure

The organization of different levels of pay within a company or industry, usually based on factors like experience, education, and performance.

Market Rate

The average cost or compensation for a particular job or service in the broader market or industry.