If a Government Regulates a Firm with Increasing Returns to Scale

If a government regulates a firm with increasing returns to scale for all levels of output:

A) Average cost pricing results in economic losses; a firm will need an additional subsidy to cover its fixed costs to prevent it from leaving the industry.
B) Marginal cost price regulation results in economic losses for the firm and a positive DWL.
C) Average cost pricing results in zero economic profit but a positive DWL.
D) Average cost price regulation allows the firm to make a positive economic profit but eliminates any DWL.
E) None of the above