Chapter 6
When the price is $2 per slice of pizza, we are at point c on the demand curve in the figure and now all three students buy a slice of pizza.
When the price of a slice of pizza is $2, Alfred has $2 of consumer surplus: The difference between how much he is willing to pay, $4 for a slice, minus how much he actually pays, $2 per slice. The longer blue arrow under point a in the figure shows Alfred's consumer surplus of $2. Betty, now, also has some consumer surplus. She is willing to pay $3 for a slice, but has only to pay $2. Therefore Betty receives $1 (=$3 - $2) of consumer surplus. The shorter blue arrow under point b in the figure shows Betty's $1 of consumer surplus. Charles, however, has no consumer surplus because the amount he is willing to pay equals the amount he does pay. Thus, the total consumer surplus is $2 from Alfred plus $1 from Betty or, in the figure, the sum of the two arrows.
The figure shows that at the price of $2, Alfred is very happy, because he has more consumer surplus than before. Betty is happy, because she now has some consumer surplus. And, Charles, at least, is not unhappy because he now is buying a slice of pizza. In summary...