The correct option is C The water droplets behave like prism and disperses sunlight.
We see rainbow in the sky only after rainfall due to dispersion of sunlight by the tiny water droplets of rain present in the atmosphere.
The water droplets act like small prisms. The rain drops are refracted, dispersed and reflected internally and then refracted again. Due to these phenomena, we see a rainbow in the sky after rainfall.
Lights of different colours emerge from the rain drops, such as red at the top and violet at the bottom. Thus, a rainbow is formed.
Hence, (C) is the correct answer.