A factory producing copper is discharging waste into a river, affecting local wildlife and residents. Classify the following implications of this behavior into the appropriate category: A) The factory's production level is socially optimal. B) The market price of copper reflects all societal costs. C) Local residents experience negative externalities from the factory's operations. D) The factory's profits will increase due to lower production costs. Which statement correctly identifies an implication of negative externalities?

The correct implication of negative externalities from the factory's behavior is statement C: local residents experience negative externalities from the factory's operations. This means that the factory's waste is harming the environment and affecting the health and quality of life of people living nearby, which is a cost not reflected in the factory's production. In contrast, statement A suggests that the factory's production level is ideal for society, which is not true if it's causing harm. Additionally, statement B implies that the market price of copper includes all societal costs, but it does not consider the negative impact on residents and wildlife. Lastly, statement D indicates that the factory benefits financially from lower production costs, which ignores the broader harm caused by its actions.