If firms have to account for external costs in production, then they will produce an output level that is ________ the efficient level.

A) at
B) below
C) above
D) either above or below

When firms have to account for external costs in production, they adjust their output to reflect the true cost of production, including the externalities. This adjustment leads to a production level that aligns with the efficient level, as it incorporates all social costs and benefits.