In the short-run an increase in the costs of production makes
A)both output and prices rise.
B)output rise and prices fall.
C)output fall and prices rise.
D)both output and prices fall.

Question

Quizplus · Accepted Answer

In the short run, an increase in the costs of production typically leads to a decrease in supply because it becomes more expensive for firms to produce goods. As a result, the quantity of output falls, and the prices of goods rise due to the reduced supply.

In the Short-Run an Increase in the Costs of Production