**Explanation:**

The given statement states that the arc has negative resistance characteristics. To understand this concept, let's break down the characteristics of an arc in detail.

**Arc Resistance Characteristics:**

1. **Linear Resistance Characteristics:** The resistance of an arc is not linear but nonlinear. As the current passes through the arc, the resistance decreases rapidly with increasing current. This nonlinearity in resistance is due to the thermionic emission of electrons from the cathode and the subsequent ionization of the gas molecules in the arc path. Therefore, option 'a' is incorrect.

2. **Positive Resistance Characteristics:** Positive resistance refers to the normal behavior of resistance where the voltage and current are in phase, and the power dissipated is positive. However, in the case of an arc, the voltage and current are usually out of phase, and the arc dissipates both active power and reactive power. Therefore, option 'b' is incorrect.

3. **Negative Resistance Characteristics:** The arc exhibits negative resistance characteristics. Negative resistance refers to a situation where the current increases as the voltage across the device decreases. In an arc, as the voltage across the arc decreases, the current tends to increase. This behavior is due to the ionization and subsequent increase in conductivity of the gas in the arc path. The negative resistance characteristics of an arc allow it to maintain a sustained discharge even at low voltages. Therefore, option 'c' is correct.

4. **Highly Inductive Characteristics:** While the arc does have inductive characteristics, it cannot be classified as "highly" inductive. The inductance of an arc depends on the length and geometry of the arc path. In general, the inductance of an arc is much lower compared to its resistance. Therefore, option 'd' is incorrect.

In conclusion, the correct answer is option 'c' - the arc has negative resistance characteristics.