If I add the cy.writefile statement within the cy.on('fail',...) block, why is it not functioning properly?

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Without seeing the specific code, it is difficult to say for sure. However, one possibility is that the cy.writefile statement is not being executed because the fail event is not being triggered. Another possibility is that the fail event is being triggered, but there is an error within the cy.writefile statement itself that is causing it to fail. It would be helpful to review any error messages or debugging information to troubleshoot the issue further.