Consumer surplus is based on the economic theory of marginal utility, which is the additional satisfaction a consumer gains from one more unit of a good or service.

A.Consumer surplus is an economic measure of consumer benefit. It is calculated by analyzing the difference between what consumers are willing and able to pay for a good or service relative to its market price, or what they actually do spend on the good or service. A consumer surplus occurs when the consumer is willing to pay more for a given product than the current market price.

Consumer Surplus is based on the concept of Diminishing Marginal Utility.

The concept of consumer surplus is an important concept in economics that measures the benefit or satisfaction that consumers receive from purchasing a good or service. It is the difference between the price that consumers are willing to pay for a good and the actual price they pay in the market.

Diminishing Marginal Utility:
Diminishing marginal utility is a concept that states that as a consumer consumes more and more of a particular good, the additional satisfaction or utility derived from each additional unit of the good decreases. In other words, the more of a good a person consumes, the less satisfaction they derive from each additional unit.

Relationship between Diminishing Marginal Utility and Consumer Surplus:
The concept of diminishing marginal utility is directly related to the concept of consumer surplus. When consumers are willing to pay a certain price for a good, it indicates the maximum amount of utility they expect to derive from consuming that good.

However, if the market price for the good is lower than what consumers are willing to pay, they experience a surplus or extra benefit. This surplus is known as consumer surplus. It represents the additional utility or satisfaction that consumers receive from paying a lower price for the good compared to what they were willing to pay.

As consumers consume more and more of a good, the marginal utility derived from each additional unit decreases. This means that the consumer surplus also decreases as more units of the good are consumed. Therefore, the concept of diminishing marginal utility is directly related to the concept of consumer surplus.

In conclusion, consumer surplus is based on the concept of diminishing marginal utility. It represents the additional benefit or satisfaction that consumers receive from paying a lower price for a good compared to what they were willing to pay. As consumers consume more of a good, the marginal utility derived from each additional unit decreases, leading to a decrease in consumer surplus.