Higher costs of production typically result in:
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A rise in the equilibrium price level: When production costs increase, producers may pass those costs onto consumers in the form of higher prices, which can lead to a rise in the equilibrium price level.
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A shift in the aggregate supply curve to the left: Higher production costs reduce the quantity of goods and services that firms are willing to supply at any given price, leading to a leftward shift in the aggregate supply curve.
So, the correct answers are:
- A rise in the equilibrium price level
- A shift in the aggregate supply curve to the left