Suppose notebooks are produced by a competitive constant-cost industry.Which of the following must cause Nanna's Notebooks to exit the industry in the long run?
A) Nanna's is notified of a rent increase,but her competitors' rents are unchanged.
B) A fire destroys half of Nanna's inventory.
C) A photographer wins a $10,000 judgment from a lawsuit charging that Nanna's used his photos on notebook covers without permission.
D) The price of cardboard used in notebook production rises.

Question

Quizplus · Accepted Answer

In a competitive constant-cost industry, firms face the same costs. If Nanna's rent increases while competitors' rents remain unchanged, her costs will be higher than those of her competitors, making it unsustainable for her to compete in the long run.

Suppose Notebooks Are Produced by a Competitive Constant-Cost Industry