Final answer:
Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. It is depicted graphically as the area above the market price and below the demand curve. In the given example, Isabella experiences a consumer surplus of $35, with her willingness to pay exceeding the purchase price of the camera.
Step-by-step explanation:
The concept described in the question is known as consumer surplus, which is a key topic in economic theory. Consumer surplus represents the difference between the amount a consumer is willing to pay for a good and the amount they pay. In the scenario provided, Isabella's willingness to pay for a new camera is higher than the purchase price, resulting in a consumer surplus.
To illustrate the concept with an example: suppose there is a point J on the demand curve which indicates that for $90, consumers would be willing to purchase 20 million tablets. This shows that if consumers pay a lower equilibrium price, say $80, those who are willing to pay up to $90 receive a surplus. The equilibrium price is the market price at which the quantity of goods supplied is equal to the quantity of goods demanded.
In Isabella's case, if her willingness to pay was, for example, $115 for the camera, and she purchased it for $80, her consumer surplus would be the difference of $35. This surplus is graphically represented by the area above the market price and below the demand curve, known as area F.