Final answer:
Consumer surplus is falsely stated as the gap between the supply curve and market price; it is actually the difference between what consumers are willing to pay and the market price, defined by the area above the market price and below the demand curve.
Step-by-step explanation:
Consumer surplus is false to be defined as the gap between the supply curve and the market price. Rather, consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay, meaning it's the area above the market equilibrium price and below the demand curve. Producer surplus is the gap between the price at which producers are willing to sell (based on their costs) and the market equilibrium price. Social surplus, also known as total surplus, is the combined total of consumer and producer surplus and is maximized at the market equilibrium. Any deviation from this equilibrium can lead to a deadweight loss, which is an inefficiency that reduces the total surplus.
For instance, if consumers are willing to pay $90 for a good but the market price is $80, those who buy at the market price obtain a surplus of $10. This surplus is graphically represented by the area F—above the market price and below the demand curve. It showcases the benefit consumers receive when they pay less than their maximum willingness to pay.