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What would a marginal benefit / marginal cost graph look like if zero abatement

ID: 1093441 • Letter: W

Question

What would a marginal benefit / marginal cost graph look like if zero abatement was the optimal level? (multiple answers allowed)

The marginal cost and marginal benefit curves intersect along the y-axis

b. The marginal cost curve is always above the marginal benefit curve and the distance between them is growing

c. The marginal benefit curve is always above the marginal cost curve and the distance between them stays the same

d. The marginal benefit curve is always above the marginal cost curve and the distance between them is growing

e. The marginal cost curve is always above the marginal benefit curve and the distance between them stays the same

***There are multiple answers to this question

Explanation / Answer

b. The marginal cost curve is always above the marginal benefit curve and the distance between them is growing.

d. The marginal benefit curve is always above the marginal cost curve and the distance between them is growing

Its for the excess production where this comes into the picture. As long as marginal cost equals marginal benefit you can keep on producing whatever you are producing and make more absolute profits as a percentage of your cost. As long as your costs don't increase you are okay.

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