Sure, Liverpool has a better squad quality and they have a more competitive domestic league. If we consider these factors, no doubt that Liverpool is superior against PSG. However, it is UCL, it is not impossible that there is a surprise. Even PSG is a smaller team, PSG may have a chance to beat Liverpool if Liverpool can't perform at their best form. Lets' see the result of the first Leg in PSG home. I think first Leg will determine which team will have a bigger chance to qualify for the next round. If PSG can win in the first Leg, I assume they will have a chance to beat Liverpool. But if Liverpool can defeat PSG in the first Leg, I don't think PSG will have a chance to go to the next round.
Liverpool have shown in this group stage that they are capable of beating any team, and they will play their first game away, which I think could give them an advantage. This is possible if they do not lose the first match. I see that Liverpool are expected to easily cope with PSG, but I think it will be a very difficult game. The confrontation between Real and Atletico is also difficult and I do not see an easy victory for Real, I admit that Atletico can surprise.
Yes, I think Atletico Madrid can surprise. Real Madrid plays very well in big matches. Maybe players can eliminate Atletico Madrid with extra motivation since it is a Champions League match, but we have seen how dangerous Atletico Madrid is in the last matches. They scored four goals against Barcelona and beat Bilbao yesterday. The dangerous team in the Spanish league is Atletico Madrid right now and they are at the top. Since both are Spanish teams, they know each other well. So I think it will be an enjoyable match. As for the Liverpool match, they may have a hard time in the Paris Saint-Germain match, but as everyone says, they are the favorites.
There is a big problem in that game. Atletico is not Manchester City man. They are better than Manchester City and with the way they are playing they might be the team to eliminated Real Madrid from the competition. Sometimes i get to pity for Real Madrid because they have faced stronger opponents than most of the team currently in the UCL. Even in difficult stages they get to play a very strong competitor.