Question

A HEADLINE article in the textbook is titled "Hurricane Damage to Gulf Ports Delays Deliveries, Raises Costs." Increased costs are likely to cause:

Answer 1

Answer: Equilibrium price level increases, real equilibrium output decreases

Explanation:

An equilibrium price increase would cause an upward shift in supply and demand curve affecting price and quantity of the product.

When there's a drop in supply and demand there would be a drop in real equilibrium output. Increase in cost as regards the headlines are likely to cause an Equilibrium price level increases and a drop in real equilibrium output.