The diagram below shows the demand and supply curves in a perfectly competitive market. 
FIGURE 12- 5
-Refer to Figure 12- 5. At the free- market equilibrium, consumer surplus is represented by the area
Definitions:
External Failure Costs
Expenses incurred when products or services fail to meet quality standards after being delivered to the customer, including warranties and returns.
Warranty Costs
Expenses incurred due to fulfilling warranty claims, including repairs, replacements, and service costs associated with guaranteeing the product's performance.
Managerial Time
The allotment and management of time by individuals in managerial positions to achieve organizational objectives effectively.
Assignable Causes
Factors or variables that can be identified and controlled, explaining variations in a process or system.
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