What is the definition of consumer surplus?

• A. The difference between total revenue and total cost
• B. The difference between what consumers are willing to pay and what they actually pay
• C. Profit per unit
• D. Government tax revenue

Answer: (B)

Consumer surplus is the extra value a consumer gets from paying less than what they’re willing to pay for a good or service. It’s the difference between the maximum amount a consumer would be willing to pay for the quantity purchased and the actual amount paid. Picture the demand curve: for each unit bought, the buyer gains a bit of surplus equal to the gap between their willingness to pay and the market price, and adding those units up gives total consumer surplus. The other descriptions describe profits or government revenue, not the benefit to consumers: total revenue minus total cost is profit, profit per unit is profitability per item, and government tax revenue is collected by the government, not the consumer’s benefit.