consumer surplus is a measure of the benefits a consumer derives from buying a good at a particular price. At any price/quantity combination, the consumer surplus will be above the demand curve, and below the price line. It can also be understood as the difference between what the consumer is willing to pay for a good and what the consumer actually ends up paying. Those consumers that are on the demand curve exactly are called MARGINAL consumers- that means, they spend their reservation price on the good. Everyone else is able to purchase the good at a price lower than their reservation price. This is important for public policy analysis because it provides insight into any governments policies for example, taxes quotas and other restrictions which will often impact the prices paid by the consumer.