An increase in input prices will cause
A)supply to shift rightward,equilibrium price to rise,and equilibrium quantity to fall.
B)supply to shift leftward,equilibrium price to rise,and equilibrium quantity to fall.
C)supply to shift rightward,equilibrium price to fall,and equilibrium quantity to rise.
D)supply to shift leftward,equilibrium price to fall ,and equilibrium quantity to rise.

Question

Quizplus · Accepted Answer

An increase in input prices will increase the cost of production for the suppliers, which will reduce their incentives to supply the same quantity at a lower price. As a result, the supply curve will shift leftward (i.e., upward and to the left). This will lead to a higher equilibrium price as demand is still constant but the supply is reduced. However, the equilibrium quantity will fall as a result of reduced supply. Therefore, option B is the correct answer.

An Increase in Input Prices Will Cause