Final answer:
The area of consumer surplus is measured by the area between the demand curve and the price he pays, which is depicted as the area above the market price and below the demand curve.
Step-by-step explanation:
Steve's consumer surplus from his consumption of hotdogs is measured by the area between the demand curve and the price he pays. The correct answer to the question is B. Price he pays. Consumer surplus represents the difference between what consumers are willing to pay for a good or service (the value they place on it) and the price they actually pay. It is graphically shown as the area under the demand curve but above the market price level.
For instance, if consumers are willing to pay $90 for a good, as indicated by point J on the demand curve, but the equilibrium market price is $80, the consumer surplus is the area above $80 and below the demand curve. This surplus reflects the extra benefit or utility consumers receive because they are paying less than what they are willing to pay, based on the demand curve which traces their willingness to pay for different quantities.