When prices of input materials increase, supply curve shifts to the left while demand remains stable. The shift of supply will tend to cause which of the following?

An increase in the price of input materials raises the cost of production. This makes it less profitable for suppliers to produce the same quantity at any given price, leading to a decrease in supply. This is represented by a leftward shift of the supply curve. With the demand curve remaining stable, the new intersection point (equilibrium) occurs at a higher price and a lower quantity. The higher price reflects the increased production costs, and the lower quantity reflects the reduced supply available in the market.

A. The equilibrium quantity will decrease, not increase, because the supply has been reduced due to higher costs.
B. The equilibrium price will increase, not decrease, as suppliers need to cover their higher production costs.
C. This option incorrectly states the price will decrease and the quantity will increase, which is the opposite of the actual outcome.

1. Mankiw, N. G. (2021). Principles of Microeconomics (9th ed.). Cengage Learning. Chapter 4, Section "Shifts in the Supply Curve," discusses how input prices are a key variable that shifts the supply curve. An increase in input prices shifts the supply curve to the left, leading to a higher equilibrium price and lower equilibrium quantity.

2. Krugman, P., & Wells, R. (2018). Microeconomics (5th ed.). Worth Publishers. Chapter 3, "Supply and Demand," explains that a change in an input price is a primary factor causing a shift in the supply curve, altering the market equilibrium.

3. Massachusetts Institute of Technology (MIT) OpenCourseWare. (2018). 14.01 Principles of Microeconomics, Fall 2018. Lecture Notes, Lecture 2: Apply Supply and Demand. Section 2.3, "Shifts in Supply and Demand," illustrates that an increase in production costs shifts supply left, resulting in a higher price and lower quantity.