Marginal Costs and Marginal Benefits of Environmental Protection

At a low level of protection like Qa, pollution is heavy, there are many cheap and easy ways to cut it, and each cut brings a large benefit. Marginal benefit is far above marginal cost, so more protection is clearly worth buying.

As protection rises the easy fixes run out and the costly methods start, so marginal cost climbs. The largest benefits have already been collected, so marginal benefit falls. At Qb the two are equal, which is the efficient amount. Past that, at Qc, another unit of protection costs more than it is worth, and the resources spent on it would do more good elsewhere. The slider moves Qa and Qc away from the crossing, and the side panel compares cost and benefit at each.