A McDonald's Big Mac Value Meal Consists of a Big

question 56

Multiple Choice

A McDonald's Big Mac 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 exists and if so how would you exploit it and how much would you make on one extra value meal?

• A)Yes,buy 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 value meal to make arbitrage profit of $1.09.
• D)Yes,buy Big Mac,Coke,and Fries then sell value meal to make arbitrage profit of $0.68.

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Definitions:

Credential Inflation

The phenomenon where the educational requirements for a job increase, even though the actual skills needed for the job do not.

Certificates

Official documents recognizing the completion of a course of study or verifying qualifications.

Degrees

Qualifications awarded by educational institutions, such as colleges or universities, to signify the completion of a course of study.

Meritocracy

A system where individuals are rewarded and advanced based on talent, effort, and achievements, rather than background or connections.