When the production price of a product increases, it typically results in a decrease in supply. Producers may find it more expensive to manufacture goods, leading to either a reduction in the quantity supplied or an increase in the price consumers must pay for the product. This relationship is described by the law of supply, which states that, all else being equal, an increase in price results in an increase in quantity supplied.
On the other hand, consumer demand may decrease as a result of the higher prices. As prices go up, some consumers may either purchase less of the product or seek alternatives, which is explained by the law of demand. This means that while suppliers may be willing to offer more goods for sale at higher prices, consumers may be less willing to buy them at those prices. Therefore, it’s common to see a shift in the equilibrium point in the market, leading to potential shortages or surpluses until a new equilibrium is established.