Consider the Following Prices from a McDonald's Restaurant: a McDonald's

question 105

Multiple Choice

Consider the following prices from a McDonald's Restaurant: A McDonald's Big Mac value meal consists of a Big Mac sandwich, large Coke, and a large fries. Assuming that there is a competitive market for McDonald's food items, at what price must a Big Mac value meal sell to insure the absence of an arbitrage opportunity and uphold the Law of One Price?

• A)$4.08
• B)$4.62
• C)$5.44
• D)$6.80

---

Definitions:

Factor Analysis

A statistical technique that explains the variation among observed, related variables through fewer, unseen variables known as factors.

Covariance

A measure of how two variables change together, indicating the direction of their linear relationship.

Analysis Of Variance

A statistical method used to compare the means of three or more samples to determine if at least one sample mean significantly differs from the others.

Trend Analysis

Trend Analysis is a statistical technique used to identify patterns or trends in data over time to predict future movements.