A negative externality or spillover cost occurs when:

A.  firms fail to achieve allocative efficiency.
B.  firms fail to achieve productive efficiency.
C.  the price of the good exceeds the marginal cost of producing it.
D.  the total cost of producing a good exceeds the costs borne by the producer.

FOORQUIZ answer:

D.  the total cost of producing a good exceeds the costs borne by the producer.