3. The effect of negative externalities on the optimal quantityof consumption Consider the market for electricity. Suppose that a power plant dumps byproducts into a nearby river, creating a negative externality for those living downstream from the plant. Producing additional electricity imposes a constant per-unit external cost of $280. The following graph shows the demand (private value) curve and the supply (private cost) curve for electricity. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $280 per unit. 800 720 O Social Cost 640 560 O Supply 480 (Private Cost) PRICE (Dollars per unit of electricity) 400 320 240 O 160 O O Demand 80 (Private Value) 1 2 3 5 6 QUANTITY (Units of electricity) The market equilibrium quantity is _ units of electricity, but the socially optimal quantity of electricity production is _ units. To create an incentive for the firm to produce the socially optimal quantity of electricity, the government could impose a of $ per unit of electricity