A. Overproduced since the actual price is too low

Reason: When the production and consumption of a good in the market exerts marginal external cost, the market fails to accommodate the external costs generated during the process and overproduces the level of output. The market equilibrium happens at a point where the marginal private benefits equal the marginal private costs whereas the socially efficient outcome happens when the marginal private benefits equal the marginal social costs. The marginal external costs makes the marginal social cost much higher than the marginal private costs, making the market equilibrium happen at a point where the price is lower than the socially optimal price and output is more than the socially efficient level of production.