Use the Table for the Question(s)below

question 44

Multiple Choice

Use the table for the question(s) below.
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 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 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)No,no arbitrage opportunity exists.
• C)Yes,buy a Big Mac,Coke,and fries,then sell a value meal to make arbitrage profit of $1.09.
• 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:

Cold War

The period of geopolitical tension between the Soviet Union and the United States and their respective allies from the end of World War II until the dissolution of the Soviet Union in 1991.

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means lasting for only a limited period of time; not permanent.

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Radical youth protest movement of the 1960s, named by leader Tom Hayden to distinguish it from the Old (Marxist-Leninist) Left of the 1930s.