PRICE Demand QF QUANTITY For an output level exactly at QE, the value of a unit to a buyer is _equal to the cost of a unit to a seller. Suppose a firm that produces for this market is able to dump toxic chemicals into a river next to its factory, which poisons wildlife and harms the health of nearby residents who have no business with the company. This scenario is characterized by an externality _ , which is an example of market failure Grade It Now Save & Continue Continue without saving5 . Market efficiency and market failure Suppose that the following graph shows a free market equilibrium, with QE as the equilibrium quantity. Supply PRICE Demand