What is consumer surplus? Justify your answer with the use of a graph.

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. It represents the benefit or value that consumers receive from purchasing a product at a price lower than what they were willing to pay.

In the graph below, the demand curve represents the maximum price consumers are willing to pay for a product at each quantity. The equilibrium price is where the demand curve intersects with the supply curve, which represents the actual price of the product. Consumer surplus is the area between the demand curve and the price line, up to the quantity purchased.

As shown in the graph, consumer surplus is represented by the shaded area A + B. This area represents the benefit that consumers receive from purchasing the product at a price lower than what they were willing to pay. It is a measure of consumer welfare and represents the difference between what consumers are willing to pay and what they actually pay for a product.

Therefore, consumer surplus is an important concept in economics as it helps to measure the value that consumers receive from purchasing goods and services in the market.

[Graph: Demand curve intersecting with supply curve, with consumer surplus area shaded]

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. It is a measure of the benefit that consumers receive from being able to purchase goods and services at a price that is lower than their willingness to pay.

The following graph shows the concept of consumer surplus. The demand curve shows the relationship between the price of a good or service and the quantity that consumers are willing to buy. The supply curve shows the relationship between the price of a good or service and the quantity that producers are willing to sell.

At the equilibrium price, P-, the quantity of the good or service that consumers are willing to buy is equal to the quantity that producers are willing to sell. At this price, consumers are receiving consumer surplus equal to the area of the triangle above the equilibrium price and below the demand curve.

Consumer surplus is an important concept in economics because it shows the benefit that consumers receive from being able to purchase goods and services at a price that is lower than their willingness to pay. It is also an important factor in determining the efficiency of a market. A market that is efficient will result in a price that is close to the equilibrium price and will maximize consumer surplus.