Question

When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing​ price, the differences are called

a. consumer surplus.
b. opportunity cost.
c. monopoly profits.
d. deadweight loss?

Answer 1

When consumers end up paying less than they would in fact have been willing to pay, the total amount of payment not incurred is known as the consumer surplus. In this regard, it is surplus cash that the consumers otherwise would have expended had the producers moved so as to bring the supply curve into alignment with the consumer demand profile.