2. The effect of negative externalities on the optimal quantityof consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant external cost of $220 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for paper. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $220 per ton. (?) 1100 990 880 O Social Cost 770 O 680 Supply (Private Cost) 550 PRICE (Dollars perton of paper) 440 Demand 330 (Private Value) 220 110 2 3 5 6 QUANTITY (Tons of paper) The market equilibrium quantity is _ tons of paper, but the socially optimal quantity of paper production is _ tons. To create an incentive for the firm to produce the socially optimal quantity of paper, the government could impose a of $ per ton of paper