When McDonald's Runs a Special for Hamburgers Reducing the Price

question 417

Multiple Choice

When McDonald's runs a special for hamburgers reducing the price of Big Macs to $0.99 with all other factors held constant

• A) there is likely to be an increase in the quantity of Taco Bell's Chalupas demanded assuming Big Macs and Chalupas are substitutes.
• B) there is likely to be a decrease in demand for Taco Bell's Chalupas assuming Big Macs and Chalupas are substitutes.
• C) there is likely to be an increase in demand for Taco Bell's Chalupas assuming Big Macs and Chalupas are substitutes.
• D) there is likely to be an increase in demand for McDonald's Big Macs assuming Big Macs and Chalupas are substitutes.

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Definitions:

Debt Financing

The method of raising capital through the sale of bonds, bills, or notes to individuals or institutional investors which must be repaid at a later date.

Equity Financing

The process of raising capital through the sale of shares in a company.

Term

The time until a debt security’s principal is due to be repaid. Also called the debt’s maturity or time until maturity.

Indirect Transfers

Transactions where assets or money move between entities or locations via intermediaries rather than through a direct exchange.