Deadweight loss arises when the market quantity is not at the socially optimal level due to externalities. Which statement best captures this?

• A. Deadweight loss occurs when private and social costs align.
• B. Deadweight loss is independent of externalities.
• C. Deadweight loss arises when quantity is not at the socially optimal level due to externalities.
• D. Deadweight loss is only in public goods markets.

Answer: (C)