What happens if there is an increase in production costs?

When there is an increase in production costs, it becomes more expensive for producers to manufacture goods or provide services. As a result, many producers may choose to supply less of the product at the previous price levels, leading to a decrease in the overall quantity supplied. This decrease in supply is represented graphically by a shift of the supply curve to the left.

The leftward shift indicates that at each price point, the quantity suppliers are willing to provide has decreased due to the higher costs of production. Consequently, this change can affect market equilibrium, potentially leading to higher prices and lower quantities of goods exchanged in the market.

The other options do not accurately reflect this scenario: an increase in production costs would not result in a rightward shift in the supply curve, nor would it lead to a leftward shift in the demand curve. Moreover, equilibrium price is unlikely to remain unchanged as the supply decreases, which typically results in an increase in price due to the reduced quantity available in the market.