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:

Homo Habilis

Extinct hominin; earliest named Homo species; known only from Africa, where it arose 2.3 million years ago.

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An extinct species of early human that lived throughout Africa and Eurasia during the Pleistocene Epoch.

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A respiratory organ found in vertebrates that exchanges oxygen and carbon dioxide with the environment.

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