Final answer:
In the described situation, a consumer surplus arises when books are cheaper than expected, allowing the purchase of all books within the $400 budget provided by your parents. The opportunity cost is what you forgo by choosing to spend that money on books rather than something else, while the budget constraint represents the limit on spending based on available funds.
Step-by-step explanation:
The scenario described where your parents gave you the $400 you thought you needed to purchase books for the semester, but the books turned out to be less expensive, allowing you to purchase all of the required and recommended books, illustrates the concept of consumer surplus. Consumer surplus occurs when the price that consumers are willing to pay for a product or service is higher than the actual price they pay, resulting in additional benefit or 'surplus' enjoyment. In this case, the surplus is the money saved from the initial $400 budget that was allocated for books.
The opportunity cost in this situation would be the value of the next best alternative that you forgo by spending the $400 on books. For example, if you could have used that money for a different purpose, such as entertainment or saving, the opportunity cost is the enjoyment or savings you would have gained from those alternatives. Rational consumers weigh the opportunity cost against the marginal utility (satisfaction) received from purchasing additional units of a product, and they will continue purchasing until the two are equal.
Budget constraint refers to the limited amount of income available to consumers for making purchases. When books are cheaper than expected, you may be able to purchase more within your budget, moving along your budget constraint to obtain the maximum possible utility.