Q2Restructured Power System
Question
Q.2. What is Consumer Surplus?
Answer
Consumer surplus is the difference between what a consumer is willing to pay for a good (as represented by the demand curve) and what they actually pay (the market price), representing the net economic benefit gained by the buyer.
Consumer surplus is the economic welfare measure representing the difference between the maximum price a consumer is willing to pay for a unit of a good or service (given by their position on the demand curve) and the price they actually pay in the market; graphically, it is the area between the demand curve and the horizontal market-price line, up to the quantity actually purchased, representing the net benefit consumers derive from being able to buy at the market-clearing price rather than their own higher reservation price.