Consumer surplus indicates:

Consumer surplus is a key concept in economics that measures the benefit that consumers receive when they purchase a product for a price lower than the maximum price they are willing to pay. It reflects the difference between the highest price a consumer is willing to pay for a good or service and the actual price they pay.

When the market price is lower than what consumers are prepared to pay, they experience a gain, or surplus, in terms of financial resources. This surplus is an important indicator of consumer welfare; it suggests that consumers derive extra utility or satisfaction from the purchase because they pay less than their perceived value of the good.

This concept plays a critical role in understanding market efficiency and the benefits of trade. It highlights how market prices can fluctuate and affect consumer behavior and choices. Thus, the correct understanding of consumer surplus provides insight into economic welfare and helps evaluate the effectiveness of different markets.