Economics becomes a science · 1770s–1920s
1844
Measuring what a bridge is worth
Engineer Jules Dupuit invents consumer surplus and the loss from tolls and taxes.
Jules Dupuit, a French engineer, asked how much a public bridge was worth to its users. He saw that many would pay more than the toll, and that a high toll stopped some crossings that were worth making, a loss nobody gains.
💡 Why it made sense then
The French state was building roads, canals and bridges and needed a way to judge them and set tolls.
Ideas it gave us
- ⚖️ Consumer surplus
Consumer surplus is the difference between what buyers would be willing to pay and what they actually pay. Producer surplus is the difference between what sellers receive and the lowest price they'd accept.
- ⚖️ Deadweight loss
Deadweight loss is the value lost to society when a market produces less (or more) than the efficient quantity, often because of a tax, price control or monopoly. It's surplus that no one gets.
Practise with $10,000 in play money
Free. No real money involved.