The Figure Above Shows a Natural Monopoly

The figure above shows a natural monopoly.
-In the figure above,if the firm is regulated using an average cost pricing rule,the firm

A) avoids an economic loss, but produces less than the efficient quantity and creates a deadweight loss.
B) incurs an economic loss, but produces the efficient quantity and creates a deadweight loss.
C) avoids an economic loss, is able to produce the efficient quantity, and therefore avoids creating a deadweight loss.
D) avoids an economic loss, produces the efficient quantity, and creates a deadweight loss.
E) incurs an economic loss, produces the efficient quantity, and avoids creating a deadweight loss.

Correct Answer:

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