ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As a result, a higher cost of production typically causes a firm to supply a smaller quantity at any given price. In this case, the supply curve shifts to the left.

Detailed explanation-2: -If the cost of production is lower, the profits available at a given price will increase, and producers will produce more. With more produced at every price, the supply curve will shift to the right, meaning an increase in supply.

Detailed explanation-3: -If the cost of any factor of production-labor, raw materials, equipment-decreases, the quantity that producers are willing (and able) to supply at a given price increases. Producers with lower costs will always be able to supply more of a product at a given price than those with higher costs.

Detailed explanation-4: -Increasing Costs Lead to Increasing Price. Because the cost of production plus the desired profit equal the price a firm will set for a product, if the cost of production increases, the price for the product will also need to increase.