Answer:
The correct answer here is: externality; market failure.
Explanation:
An externality can be defined as a situation in which cost or benefit generated by someone is incurred or received by a third party.
In this situation, the dumping of chemicals in the river is causing pollution which is harming wildlife and the nearby residents. The residents have to incur costs because of the activities of the firm. This is an example of negative externality.
The cost borne by the residents is not included in the price of the firm's product. This is an example of market failure.
