Question

1. individual demand and consumer surplus

consider the market for private jets. the market price of each private jet is $135,000, and each consumer demands no more than one private jet.
suppose that paolo is the only consumer in the private jet market. their willingness to pay for a private jet is $270,000. based on paolos willingness to pay, the following graph shows his demand curve for private jets.

shade the area representing paolos consumer surplus using the green rectangle (triangle symbols).

Explanation:

Step1: Define consumer surplus

Consumer surplus = Willingness to pay - Market price, for 1 unit.

Step2: Calculate surplus per jet

$\$270,000 - \$135,000 = \$135,000$

Step3: Identify graph area

The area is a rectangle with:

• Height: $270 - 135 = 135$ (in thousands of dollars)
• Width: $1 - 0 = 1$ (quantity of jets)

This rectangle spans from (0, 135) to (1, 270) on the graph.

Answer:

The consumer surplus is $\$135,000$, represented by the rectangular area on the graph bounded by:

• Price axis: $\$135,000$ to $\$270,000$
• Quantity axis: 0 to 1 private jet