An externality is said to exist when:

A. individuals impose costs or benefits on others but have no incentive to take these costs and benefits into account.
B. individual actions are affected by government policies (such as taxes) that are externally imposed on the market.
C. individuals impose costs or benefits on others, and the market provides incentives to take these costs and benefits into account.
D. individual actions are affected by external forces like the loss of U. S. jobs because of competition from abroad.