If a Monopolist's Production Process Has Economies of Scale and Average

Multiple Choice

If a monopolist's production process has economies of scale and average cost exceeds marginal cost, then

A) the government could set price equal to marginal cost and subsidize the monopoly.
B) the government should not offer a subsidy, since the monopoly can make a profit setting price equal to marginal costs.
C) if the government sets price equal to average cost, the monopoly will go out of business.
D) the government cannot regulate price.