What defines consumer surplus?

Consumer surplus is defined as the difference between what consumers are willing to pay for a good or service and what they actually pay for it. This concept reflects the additional benefit or utility that consumers receive when they purchase a product at a lower price than the maximum price they are prepared to pay. For example, if a person values a concert ticket at $100 but purchases it for $70, the consumer surplus gained is $30.

This concept is crucial in understanding market efficiency, as it illustrates consumer benefits in a transaction. In competitive markets, consumer surplus is maximized when goods are allocated to those who value them most highly, helping to balance supply and demand. Thus, option B accurately captures the essence of consumer surplus, distinguishing it from elements like production costs, profit margins, or the relationships between supply and demand.