Consumer Surplus

The benefit that consumers receive from the existence of a market price. Consumer surplus is measured as the difference between what consumers are willing and able to pay for a good or services and the market price of the good.

Supposed a college student is willing to pay US$400 for a new iPhone4S, but the market price of the iPhone, which is determined by the interaction of all consumers and producers, is only US$200. Then the consumer surplus for the college student of purchasing the iPhone4S is US$200.