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A rock band will be playing on campus. The profit-maximizing band is charging $12 to nonstudents, who have an elasticity of demand of -2, while
A rock band will be playing on campus. The profit-maximizing band is charging $12 to nonstudents, who have an elasticity of demand of -2,
while it is charging $8 to students (the band can easily separate students from non-students by asking for a student ID at the door).
Assuming that the band is maximizing profits, the price elasticity of demand of students is:
-4
-2
-1
2
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