The fact that electric charge is quantized means that:

charge resides on particles
there exists a smallest possible magnitude of charge
a charge equal to a fraction of one coulomb cannot exist
none of these

Correct answer: there exists a smallest possible magnitude of charge

Solution

Quantization of charge states that any observable charge is an integral multiple of the elementary charge e (Q = n*e). This implies there is a minimum nonzero magnitude of charge, namely e. A fraction of a coulomb (like 1 microcoulomb) is perfectly allowed because it is still a multiple of e, so that option is wrong.

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