How is consumer surplus measured in relation to the demand curve and price?

Consumer surplus represents the difference between what consumers are willing to pay for a good or service and what they actually pay. It is a critical concept in understanding the benefits consumers receive in the marketplace.

To measure consumer surplus, it is illustrated graphically as the area below the demand curve, which reflects the maximum price consumers are willing to pay for each unit of the good, and above the actual market price they pay. This area effectively captures the total value consumers gain from purchasing the good at a lower price than they were prepared to pay.

When examining a demand curve, the curve itself shows the relationship between price and quantity demanded. The market price represents a fixed point, and the area between this price level and the demand curve signifies the excess amount that consumers derive in satisfaction over the price they pay. Thus, the correct assessment of consumer surplus is represented as the area below the demand curve and above the price level, demonstrating both the willingness to pay and the actual expenditure in the market.