Which of the following is an example of consumer surplus?

• A. A buyer purchases a concert ticket for \$40 even though they were willing to pay \$60.
• B. A firm reduces production costs by adopting new technology.
• C. A consumer decides not to buy a product because the price is too high.
• D. A seller increases the price of a product to maximize profit.

Answer: (A)

Verified step by step guidance

1. Understand the concept of consumer surplus: it is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay.
2. Identify the scenario where a consumer pays less than what they were willing to pay, which creates a surplus or extra benefit for the consumer.
3. Analyze each option to see if it fits the definition of consumer surplus. For example, if a buyer pays \$40 for a ticket but was willing to pay \$60, the consumer surplus is \$60 - \$40.
4. Recognize that options involving firms reducing costs or sellers increasing prices relate to producer surplus or other economic concepts, not consumer surplus.
5. Conclude that the example where the buyer purchases a concert ticket for \$40 despite being willing to pay \$60 illustrates consumer surplus.