Which of the following best describes consumer surplus in relation to a buyer's willingness to pay?

• A. Consumer surplus is the difference between what a buyer is willing to pay and what the buyer actually pays.
• B. Consumer surplus is the price at which the seller is willing to sell a good.
• C. Consumer surplus is the total amount paid by all buyers in a market.
• D. Consumer surplus is the difference between the market price and the seller's cost of production.

Answer: (A)

Verified step by step guidance

1. Understand the concept of willingness to pay, which is the maximum amount a buyer is ready to pay for a good or service.
2. Recognize that the actual payment made by the buyer is the market price of the good or service.
3. Define consumer surplus as the difference between the buyer's willingness to pay and the actual price paid.
4. Express consumer surplus mathematically as \(\text{Consumer Surplus} = \text{Willingness to Pay} - \text{Price Paid}\).
5. Compare this definition with the other options to confirm that consumer surplus specifically measures the benefit to the buyer from paying less than their maximum willingness to pay.