In the context of consumer surplus and willingness to pay, what is the term for the difference between the maximum amount a consumer is willing to pay for a good and the actual amount they pay?

• A. Marginal cost
• B. Consumer surplus
• C. Producer surplus
• D. Deadweight loss

Answer: (B)

Verified step by step guidance

1. Understand the concept of willingness to pay, which is the maximum amount a consumer is ready to pay for a good or service.
2. Recognize that the actual amount paid by the consumer is often less than this maximum willingness to pay.
3. Define consumer surplus as the difference between the maximum willingness to pay and the actual price paid.
4. Note that consumer surplus measures the benefit or gain consumers receive when they pay less than what they were willing to pay.
5. Distinguish consumer surplus from other terms: marginal cost relates to production cost, producer surplus is the benefit to sellers, and deadweight loss refers to inefficiency in the market.