A rock band will be playing on campus.

The profit-maximizing band is charging $36 to non-students, who have an elasticity of demand of -2.

Assume the band knows that students have an elasticity of demand for shows of -4.

Because the band can easily separate students from non-students (by asking for a student ID at the door), the band can practice third-degree price discrimination.

For the band to maximize profits, it should charge students:

$0

$18

$24

$12

$36