Consumer surplus

If a consumer purchases x units of some good, then the consumer surplus is the total value in dollars that the individual places on those units less the amount that the individual paid. A consumer might value three airline flights to London at $1000 for the first, $800 for the second and $600 for the third but if the consumer only paid a total of $1500 for the three, then consumer's surplus is $900. That is, the excess of what that person would have been prepared to pay over what they did pay. In the same way that an industry demand curve is the summation of the demand curves of individual consumers, the industry consumer surplus is the sum of the consumer surplus of all the individuals who have purchased some of the good.