Answer:
C. paying the cost of the externality
Explanation:
An externality is defined as cost or benefit that is generated from the activities of a producer, but it is not financially incurred by the producer.
It can be positive or negative externality.
For example if we have a street light the effect on the society does not affect the producer cost wise so it is an externality to him.
When a producer now bears the cost of an externality he is internalizing the externality.
For example if a company polluted the environment with a byproduct of its production process this is a negative externality.
They can internalise it by cleaning up the pollutant from the society.
