Suppose That One Forestry Company Can Operate at a Lower

Suppose that one forestry company can operate at a lower average cost than several smaller firms. The forestry company is a natural monopoly in this local region. If the government was to regulate log prices to equal marginal cost, then this would:

A) result in a less than optimal total surplus for the log market
B) maximise the forestry company's producer surplus
C) cause the forestry company to operate at a loss
D) do all of the above

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