Which of the following is the best example of a supply-side market failure?

No one provides street lights in a town because, once the lights are in operation, people don't have to pay to use them.
A firm keeps its production costs down by dumping its waste in the nearby river, adversely affecting water quality for residents in the area.
Government imposes taxes on the production of a socially desirable good.
Street performers don't get full payment for the value of their output because people watch and enjoy the shows without paying the artist.

The following is the best example of a supply-side market failure is a firm keeps its production costs down by dumping its waste in the nearby river affecting water quality for residents in the area.

What is market failure?

A market failure is an economic condition defined by the inefficient distribution of goods and services on the open market. In market failure, individual incentives for rational behavior do not lead to rational group outcomes. A simple example of market failure is when a monopoly seller sets a high price for a product, forcing the buyer to purchase the overpriced item.

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