Which one of the following statements about market failure and externalities is correct?
Negative externalities in production cause marginal private costs to exceed marginal social costs.
A positive externality in consumption means that the marginal social benefit of a transaction is greater than the marginal private benefit.
The free-rider problem means that private firms can easily charge consumer prices for pure public goods.
Demerit goods are only ever supplied by the public sector due to complete market failure.
