Consumer Surplus

Consumer surplus is the area between the demand curve and the price paid — the aggregate "deal" consumers get because they were willing to pay more than the market price. For a linear demand $P = P_{\max} - bQ$ traded at quantity $Q$ and price $P$:

When to use

Compute consumer surplus whenever you need a welfare comparison across market structures or pricing schemes — e.g. monopoly vs perfect competition, decentralised complementary firms vs an integrated monopolist, or a two-part tariff vs uniform pricing. Consumer surplus is also the quantity the firm tries to extract in First-Degree Price Discrimination (via $T = CS$ in a Two-Part Tariff) and the basis for Information Rent in Screening models.