Consumer surplus is best described as:

Consumer surplus is best described as:

• A. The difference between the highest price a consumer is willing to pay and the price paid.
• B. The difference between price and marginal cost.
• C. The area under the supply curve.
• D. The total revenue from sales.

Answer: (A)

Consumer surplus measures the extra benefit a buyer gets when the price paid is lower than the maximum price they’re willing to pay. It’s the difference between the highest amount a consumer would pay for a unit and the actual price paid. This captures the gain from getting a good at a price below what one would be willing to pay. Graphically, it’s the area between the demand curve (willingness to pay) and the market price, up to the quantity bought. The other descriptions relate to different concepts: the gap between price and marginal cost ties to producer surplus, the area under the supply curve is tied to costs, and total revenue is simply price times quantity, not the extra benefit to consumers.

Consumer surplus measures the extra benefit a buyer gets when the price paid is lower than the maximum price they’re willing to pay. It’s the difference between the highest amount a consumer would pay for a unit and the actual price paid. This captures the gain from getting a good at a price below what one would be willing to pay. Graphically, it’s the area between the demand curve (willingness to pay) and the market price, up to the quantity bought. The other descriptions relate to different concepts: the gap between price and marginal cost ties to producer surplus, the area under the supply curve is tied to costs, and total revenue is simply price times quantity, not the extra benefit to consumers.