for those living downstream from the factory. Producing additional pharmaceuticals imposes a constant per$-$unit external cost of $$665.$ The following

graph shows the demand $($private value$)$ curve and the supply $($private cost$)$ curve for pharmaceuticals.

Use the purple points $($diamond symbol$)$ to plot the social cost curve when the external cost is $$665$ per unit.

The market equilibrium quantity is

units of pharmaceuticals, but the socially optimal quantity of pharmaceuticals production is

units.

To create an incentive for the firm to produce the socially optimal quantity of pharmaceuticals, the government could impose a

of

per unit of pharmaceuticals.