Fill in the blank with the most appropriate word.
We live in the city. We wish we _____ in the country.
This sentence employs the second conditional that is used to express imaginary and impossible situations. So, second conditional uses forms of verbs in past tense. In case of second conditional, when ‘I/we wish’ is used to talk about a regret about a present or future event, then the expressions ‘I/We wish’ is followed by past simple. Hence, Option C is the correct answer here. Options B and D cannot be used as they use forms of verbs in present tense. Option A cannot be used as it would render the sentence grammatically incorrect.