An Externality Exists in the Production of a Good or Service

An externality exists in the production of a good or service when:

A) the marginal cost to society of consuming an extra unit of a good equals the marginal social benefit.
B) resources are allocated such that no one can be made better off without making someone
C) the marginal social cost differs from the marginal private cost of production.
D) markets are allocatively and productively efficient.