Which statement about consumer surplus is correct?
A) Consumer surplus is the gross benefit to consumers from the exchange that occurs in a market.
B) Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction.
C) Total consumer surplus is equal to the price the consumers paid multiplied by the quantity they purchased.
D) Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market price.

Question

Quizplus · Accepted Answer

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. Therefore, consumer surplus represents the gains from trade on the part of the consumer that result from a market transaction. Choice A is incorrect because it refers to gross benefit, whereas consumer surplus is only a part of the benefits. Choice C is incorrect because it assumes that all consumers paid the same price, which may not be true. Choice D is incorrect because it refers to the minimum price the consumer is willing to pay, whereas it is actually the maximum price.

Which Statement About Consumer Surplus Is Correct