3. 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 $315 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 $315 per ton. 000 810 720 650 540 PRICE (Dollars per ton of paper) 450 360 270 180 90 0 2 0 QUANTITY (Tons of paper) Supply (Private Cost) Demand (Private Value) Social Cost ?