Why is this area thought of as a surplus? For each quantity purchased, the
corresponding point on the market demand curve represents the amount of money
some person would have been willing to pay for the last unit of the good. The total
willingness to pay for some quantity of this good—say, three units—is the sum of the
willingness to pay for each of the three units. Thus, the total willingness to pay for
three units would be measured by the sum of the willingness to pay for the first,
second, and third units, respectively. It is now a simple extension to note that the
total willingness to pay is the area under the continuous market demand curve to the left of the allocation in question. For example, in Figure 2.2 the total willingness to pay for Qd units of the commodity is the shaded area. Total willingness to
pay is the concept we shall use to define the total value a consumer would receive from the five units of the good. Thus, total value the consumer would receive is equal to the area under the market demand curve from the origin to the allocation of interest. Consumer surplus is thus the excess of total willingness to pay over the (lower) actual cost.