Angela runs a donut shop in a residential neighborhood in Houston. Currently, Angela sells 300 glazed donuts at $0.80 each, 250 jelly donuts at $1.20 each, and 200 chocolate donuts at $1.00 each. On average, it costs Angela $0.40, $0.60, and $0.50 to make each glazed, jelly, and chocolate donut, respectively. Lately, Angela has seen a surge in demand for her jelly donuts. Angela is considering the following two options: (1) Raise the price of her jelly donuts to $1.50 each - at this new price, Angela still expects to sell 250 jelly donuts. The prices and demand for glazed and chocolate donuts would remain unchanged. (2) Keep the price of the jelly donuts at $1.20 - for this option, Angela believes she could sell 100 more jelly donuts, but that the demand for chocolate donuts would be reduced by an equal amount (i.e., 100 donuts). The price and demand for glazed donuts would remain unchanged. Of course, Angela could always continue to do what she is doing now.

Requirements:

i. What is Angela's goal in this decision problem?

ii. What are Angela's options?

iii. What is the cash flow associated with each option?

iv. Based on your answer to part (c), what should Angela do?