Question

On the chart below the environment case for the Jones company can be observed. The dotted line demonstrates a broad gap between investment (MC) in reducing pollution and the benefit gained (MB) by the investment. What scenario does this illustrate, as it relates to the marginal cost of reducing pollution?

Answer 1

Answer: A broad separation between marginal cost and marginal benefit curves indicates that there are cheap and easy ways to reduce pollution available. Meaning the marginal benefits of doing so is high. So, allocating resources to fight pollution is wise.

Explanation:

Your question was a bit incomplete so I attached the whole question.

Looking at the line one can surmise that the marginal benefits of investing in cutting pollution is greater than the marginal cost. The definitely shows that there are cheap and easy ways of managing Pollution because for every dollar invested, they get more than they put in in terms of benefits.

Look at it this way, at that line the marginal cost is maybe $5 but the marginal benefit is $15. The means that there are cheap ways of reducing Pollution because simply paying $5 will get you $15 worth of pollution reduction.

It is therefore wise to allocate resources to fight pollution.

If you need any clarification do comment. Cheers.