To Explain:
The meaning of
Concept Introduction:
Consumer surplus is the measure of benefit of the consumer from the purchase of a good or service.
Explanation of Solution
Consumer surplus is the difference between the maximum amount the consumer is willing to pay for a good and the amount the consumer actually pays. Suppose a moviegoer is willing to pay $15 for a blockbuster movie ticket but pays $12. Then $3 is her consumer surplus. When the consumer surpluses of all consumers buying a product are added, a measure of aggregate consumer surplus is obtained. Thus, consumer surplus is the total benefit from the consumption of a product, net of the total cost of purchasing it. The situation is depicted in the figure below.
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