Final answer:
The step in profit pool analysis for McDonald's considering growing potatoes is likely estimating the size of the value-chain activity, which involves understanding where the most value and profit are added in the supply chain.
Step-by-step explanation:
When McDonald's considers growing potatoes for their business, they would engage in profit pool analysis to assess the profitability of this venture. The specific step of the profit pool analysis the question is referring to is most likely, estimating the size of the value-chain activity in the pool, which is a crucial part of understanding where in the process the most value is added and the most profit can be made. This involves examining different sections of the supply chain to see where costs are incurred and where margins can be maximized.
Profit maximization is the ultimate goal for any monopolistic competitor, including the hypothetical Authentic Chinese Pizza company mentioned. By identifying the level of output where marginal revenue (MR) equals marginal cost (MC), the company can determine the most profitable amount of goods to produce. This approach helps the firm to decide on the optimal balance between cost and revenue, considering the unique market structure they operate within.