In a competitive market, why does consumer surplus arise for some buyers at the equilibrium price?

Introduction / Context:
Consumer surplus is a core idea in welfare economics and microeconomic theory. It measures the extra benefit that consumers receive when they pay a price lower than what they were actually willing to pay for a good or service. This question tests whether you understand the basic reason why consumer surplus arises in a perfectly competitive market at the equilibrium price where demand equals supply.

Given Data / Assumptions:

• The market is competitive and reaches an equilibrium price where quantity demanded equals quantity supplied.
• Different consumers have different maximum willingness to pay for each unit.
• The market price is the same for all buyers in this competitive setting.
• Consumer surplus is defined as the difference between willingness to pay and actual price paid.

Concept / Approach:
In a demand schedule and demand curve, each point reflects the highest price that a consumer is willing to pay for an additional unit. At the equilibrium price, some consumers who value the good very highly would have been prepared to pay a higher price than the market actually charges. Because they can purchase the good at the lower equilibrium price, they enjoy an extra benefit measured by the difference between their willingness to pay and the actual price. This area under the demand curve and above the price line up to the quantity purchased is called consumer surplus.

Step-by-Step Solution:
Step 1: Recall that individual consumers differ in their preferences and in how much they value a good.Step 2: Plot these valuations on a demand curve, where higher points represent higher willingness to pay for early units.Step 3: In a competitive market, the equilibrium price is determined by the intersection of demand and supply, and all buyers pay this same market price.Step 4: Consumers who would have been willing to pay more than the equilibrium price pay only the equilibrium price, gaining extra satisfaction beyond what is reflected in their expenditure.Step 5: This extra satisfaction is measured as consumer surplus and is the reason why option A correctly explains its existence.

Verification / Alternative check:
Imagine a simple numerical example. Suppose one consumer would have paid up to 100 units of currency for a product, another would have paid 80, and the market equilibrium price is 60. Both buy at 60. The first consumer experiences a surplus of 40, and the second a surplus of 20. These gaps between maximum willingness to pay and actual price paid add up to consumer surplus in the market. Note that the equilibrium condition quantity demanded equals quantity supplied does not eliminate these gaps, it only balances total demand and supply at the margin.

Why Other Options Are Wrong:
If consumers were willing to pay less than the equilibrium price and forced to pay more, many would drop out of the market, and the equilibrium would not be stable. The conditions where quantity demanded is less or greater than quantity supplied describe surplus or shortage, not the reason for consumer surplus. A government imposed maximum price below equilibrium leads to a different concept, often called price ceiling and can generate additional surplus or shortage, but it is not needed to explain consumer surplus in a free market.

Common Pitfalls:
One pitfall is to confuse consumer surplus with excess supply or excess demand, which are disequilibrium situations. Another mistake is to think that at equilibrium all consumers pay exactly their maximum willingness to pay, leaving no surplus. In fact, only the marginal consumer pays a price equal to their willingness to pay, while infra marginal consumers still enjoy consumer surplus. Drawing the area under the demand curve and above the equilibrium price line can help fix this idea visually.

Final Answer:
Consumer surplus arises because some consumers are willing to pay more than the equilibrium price but can buy at the lower market price.