The difference between what a consumer is willing to pay for a commodity and what he actually does pay for it, is called:

Question

Accepted Answer

The correct option is 1:
The term you are looking for is **Consumer's Surplus**. In the study of microeconomics, this is a fundamental concept that measures the economic benefit a consumer gains from buying a good or service. It is defined precisely as the difference between the maximum price a consumer is *willing to pay* for a commodity—which reflects the utility or satisfaction they expect to gain—and the *actual market price* they end up paying. Because market price is often lower than the personal valuation many buyers hold, the consumer enjoys a "surplus" benefit, which is the money they save. This surplus represents a net gain to the consumer and is a key tool for economists in measuring market efficiency and welfare.

The incorrect option is 2:
**Producer's Surplus** is the mirror image of consumer's surplus, focusing on the seller's side of the market. This surplus is the difference between the price a producer actually receives for a product and the minimum price they would have been willing to accept to supply that product. Since the question asks about the consumer's willingness to pay versus the price *paid*, it is entirely focused on the buyer's benefit, making producer's surplus an inappropriate term. The core idea behind producer's surplus is to measure the benefit gained by the sellers, as opposed to the buyers, in a transaction.

The incorrect option is 3:
**Utility Cost** is not a standard, recognized economic term. Utility refers to the satisfaction a consumer derives from a commodity, while cost is the expenditure incurred. The question is defining an economic *surplus*—a difference between two monetary values (willingness to pay and price paid)—and not an abstract measure that conflates satisfaction with monetary outlay. The primary concept related to the consumer in a market transaction is surplus, not cost.

The incorrect option is 4:
**Supplier's Surplus** is simply another name for Producer's Surplus, as a supplier is another term for a producer in the market. Since the question explicitly deals with the difference in price from the perspective of the *consumer* (what they are willing to pay and what they actually pay), this term, which describes the benefit to the *seller* or supplier, is incorrect. Both Producer's Surplus and Supplier's Surplus measure the benefit to the firm, not the individual buyer.