Firm a and Firm B Are the Only Two Companies

Firm A and Firm B are the only two companies that sell mail-order DVD rental subscriptions. For several years, Firm A priced its subscriptions below average variable cost. Firm B tried to compete by also selling subscriptions below average variable cost but went bankrupt and exited the market. Several months after Firm B exited the market, Firm A raised prices by 40% and is currently earning large, positive economic profits. Based only on this information, an argument can be made that:

A) Firm B must have made bad business decisions because it went bankrupt.
B) Firm A and Firm B must have had a collusive agreement.
C) the mail-order DVD rental subscription market is a monopolistically competitive market.
D) Firm B engaged in predatory pricing.
E) Firm A engaged in predatory pricing.