What will result from an increase in resource costs to firms in a market

Question

Quizplus · Accepted Answer

An increase in resource costs to firms means that the cost of production for firms will increase. To maintain their profit margins, firms will have to raise the prices of their goods or services. This will lead to an increase in equilibrium price. However, as prices increase, demand for the goods or services will decrease, leading to a decrease in equilibrium quantity. Therefore, the answer is D - an increase in equilibrium price and a decrease in equilibrium quantity.

What Will Result from an Increase in Resource Costs to Firms