The change in price of the input used in. the production process affects the equilibrium price and quantity of a commodity in the following ways:
(i) When the price of the input used in the production process increases, the cost of production will increase which will lead to decrease in the profit and the supply will also be decreased. As a result, the supply curve will shift to the left, it means the production will decrease and the equilibrium price will increase.
(ii) When the price of the input used in the production, process decreases, the cost of production will decrease Which will lead to increase in the profit and the supply will also increase. As a result, the supply curve will shift to the right, it means the production will be increased in order to bring a balance between the supply and the demand of the market and the equilibrium price will decrease in this condition.
