Which of the following statements accurately describe the implications of market equilibrium in the presence of externalities? Select all that apply.

Market equilibrium occurs when the quantity of a good or service that buyers want to buy equals the quantity that sellers want to sell, resulting in a stable price. However, when externalities are present, such as pollution from a factory, the costs or benefits of this activity are not reflected in the market price. This means that the market may produce too much of a harmful good or too little of a beneficial one, leading to an inefficient allocation of resources. For example, if a factory pollutes the air, it may not have to pay for the health costs imposed on the community, causing it to produce more than is socially optimal. Therefore, addressing externalities is important to achieve a true market equilibrium that reflects the overall well-being of society.