Explain one possible effect on the equilibrium market price of an increase in production costs for firms

An increase in production costs will result in an increase in the equilibrium price. This is because the increase in production cost means that firms will be less willing to supply and therefore there will be a fall in supply. As the market supply curve has shifted left this causes the equilibrium market price to rise.

LR

Related Economics GCSE answers

All answers ▸

How can a tax be represented in a simple demand and supply diagram?


Explain why a firm in Perfect Competition earns supernormal profits in the short-run


What are the factors affecting the price elasticity of demand?


Identify policies a government can use to achieve economic growth.