Final answer:
An increase in a firm's production costs, such as a $0.75 increase in the cost of cheese for pizza, results in a leftward shift of the supply curve. This illustrates that at every price level, the firm supplies a smaller quantity of goods than before, which could lead to higher prices for consumers or a decrease in the quantity of goods available at the original prices.
Step-by-step explanation:
When a firm experiences an increase in its costs of production, this will typically lead to a shift in the supply curve. A supply curve represents the minimum price at which a firm is willing to produce each quantity of output. If the cost to produce goods, for example, the price of cheese for pizzas, goes up by $0.75, the firm will want to increase its prices by at least this amount to maintain profitability.
In order to show this diagrammatically, the new supply curve would be drawn to the left of the original curve. This leftward shift indicates that, at every price level, the firm is now willing to supply less quantity than before. The new point on the curve would be directly above the initial supply point but $0.75 higher, signifying the increase in production costs.
The higher production costs could be caused by various factors such as increased raw material costs, higher wages, or increased utility expenses. This shift is an example of a decrease in supply, which, all other things being equal, would mean that consumers can expect to pay higher prices for the same goods or that fewer goods would be available at the original prices.