Use the Table for the Question(s) Below -A McDonald's Big Mac Value Meal Consists of a Big

question 65

Multiple Choice

Use the table for the question(s) below.
Consider the following prices from a McDonald's Restaurant:
$\begin{array} { l l } \hline \text { Big Mac } & \$ 2.99 \\\hline \text { Large Coke } & \$ 1.39 \\\hline \text { Large Fries } & \$ 1.09 \\\hline\end{array}$
-A McDonald's Big Mac value meal consists of a Big Mac, a large Coke, and a large fries. 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 exists and if so how would you exploit it and how much would you make on one value meal?

• A) Yes, buy a value meal and then sell the Big Mac, Coke, and fries to make arbitrage profit of $0.68.
• B) Yes, buy a Big Mac, Coke, and fries, then sell a value meal to make arbitrage profit of $1.09.
• C) No, no arbitrage opportunity exists.
• D) Yes, buy a Big Mac, Coke, and fries, then sell a value meal to make arbitrage profit of $0.68.

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Definitions:

Stimulus-Response

A concept in psychology and physiology describing how organisms respond to stimuli in their environment.

Operant Conditioning

Learning that results from rewarding or reinforcing a particular behavior.

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The branch of biology that studies genes, genetic variation, and heredity in organisms, explaining how traits are passed from parents to offspring.

Environment

The surroundings or conditions in which an organism lives or operates.