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:

Ratio

A relationship between two numbers indicating how many times the first number contains the second.

Dentists

Medical professionals specialized in diagnosing, preventing, and treating diseases and conditions of the oral cavity.

Sugarless Gums

Chewing gums that do not contain sugar, often sweetened with artificial sweeteners instead.

Reliable Ratio

A consistent and dependable proportion between two quantities or variables.