Which of the following best describes consumer surplus in microeconomics?

• A. The total amount paid by consumers for a good or service
• B. The profit earned by producers from selling goods
• C. The market price of a good minus its production cost
• D. The difference between what a consumer is willing to pay for a good and what they actually pay

Answer: (D)

Verified step by step guidance

1. Understand the concept of consumer surplus: it measures the benefit or gain consumers receive when they pay less for a good or service than the maximum amount they are willing to pay.
2. Recognize that consumer surplus is not the total amount paid by consumers, but rather the difference between their willingness to pay and the actual market price.
3. Note that consumer surplus is distinct from producer profit, which relates to producers' revenues minus their costs.
4. Recall the formula for consumer surplus: \(\text{Consumer Surplus} = \text{Willingness to Pay} - \text{Actual Price Paid}\).
5. Conclude that the best description of consumer surplus is the difference between what a consumer is willing to pay for a good and what they actually pay.