I have a problem on how i connect the paper sensor to my ATMEGA168. 
Useful keyword: "photo-interrupter".
One side is a LED, the other a phototransistor.
The LED will need to be turned on with a series resistor to reduce the current. The transistor will need to go from the digital input pin to Gnd, with a 10k R from input to 5v.
Look up the data for the particular device to see which side is which.
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