Answer:
When a new person speaks in a story, begin a new paragraph and use quotation marks, Option C.
Step-by-step explanation:
A new paragraph should be started with each speaker. The dialogue should be inside quotation marks. This helps the readers to understand the conversation easily. They don't have to wait and try to understand who is saying which dialogue. Readers understand and conclude as they read. Even though it takes extra space, this is the correct way to write dialogue for each speaker.
In option C, both these conventions of new paragraph and quotation marks are mentioned, so this is the correct answer. Other options have either of the two, so are incorrect.