What is a primary effect of increasing production costs on the supply curve?

Increasing production costs have a significant impact on the supply curve, causing it to shift leftward. This shift represents a decrease in supply because, as production costs rise, producers are less willing or able to offer the same quantity of goods at existing prices. Higher costs can stem from various factors such as increased wages, higher raw material prices, or new regulations that require additional expenditures.

When the supply curve shifts leftward, it indicates that at every price level, the quantity supplied has decreased. Producers might reduce output or even exit the market if maintaining production becomes unprofitable. As a result, consumers face higher prices and potentially a lower quantity of goods available in the market. This mechanism highlights the relationship between production costs and supply, emphasizing that increases in costs generally lead to a contraction in supply rather than an expansion.

The other options do not accurately reflect the relationship between production costs and the supply curve. The supply curve remaining unchanged would suggest that production costs have no impact, which is contrary to economic theory. Similarly, shifts in the demand curve or a rightward shift in the supply curve would not occur as a direct result of rising production costs.