The Diagram Below Shows the Market Demand Curve and the Cost

Multiple Choice

The diagram below shows the market demand curve and the cost curves for a single firm. FIGURE 12-6
-Refer to Figure 12-6.Suppose this firm is being regulated using a policy of average-cost pricing.In this case,

A) the result is allocatively efficient because economic profits are zero.
B) the result is allocatively inefficient because price exceeds marginal cost.
C) the level of output is too low,but the price is allocatively efficient.
D) the result is as close to the competitive outcome as possible.
E) the result is allocatively inefficient because the marginal cost curve is downward sloping.