Answer:
a. A single grocery store is the only source of food in a small town, giving the store the ability to influence the price of food. - the source of market failure here is the fact that the grocery store is a monopoly. Because it is a monopoly, it has the market power to charge prices higher than in a free market, and to supply quantities lower than in a free market.
b. A manufacturing plant dumps chemical waste into a nearby river, poisoning the water supply for a small town downstream. - the source of the market failure here is pollution, a negative externality, because the dumping of chemical waste from the plant is affecting the people of the small town downstream.
