X 3. The effect of negative externalities on the optimal quantity of 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 $180. The following graph shows the demand (private value) curve and the supply (private cost) curve for electricity. A-Z Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $180 per unit.LEKS - Nicholas W.. ALEKS - ONLINE Q.. ~ C4ELink: Log in to t.. CENGAGE | MINDTAP Homework (Ch 10) Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $180 per unit. 1200 1080 Social Cost 960 840 O Supply 720 Private Cost) PRICE (Dollars per unit of electricity) 600 480 360 uccess Tips 240 Demand uccess Tips 120 (Private Value) 5 6 QUANTITY (Units of electricity) O O a A 2 B 5 6 8 W e y U O720 1 STy %(Pvat'e Cosf) Goo | PRICE (Dollars per unitof & o N 360 240 2 Demand {Private Value) 0 o 1 2 3 4 5 6 7 ' n \\\\ QUANTITY (Units of electricity) | | /E \\ \\ ; The market equilibrium quantity is % units of electricity, but the socially optimal quantity of electricity production is W units, To create an incentive for the firm to produce the soci ially optimal quantity of electricity, the government could impose a unit of electricity. Grade It Now Save & Continue Continue without saving F7 @ Mar28 436%F