Final answer:
Cost-push inflation is caused by supply shocks such as higher oil prices and poor weather conditions, both of which can lead to increases in the cost of production and consequently higher prices for goods and services.
Step-by-step explanation:
Cost-push inflation is indeed characterized by supply shocks that can lead to an overall increase in prices. When talking about what causes cost-push inflation, higher oil prices and poor weather conditions that affect agricultural outputs are often cited as common examples of such shocks.
When oil prices rise, it has a direct impact on the cost of production and transportation for many goods, causing businesses to raise their prices to maintain profit margins. Similarly, poor weather conditions can damage crops, reduce food supply, and consequently lead to higher food prices, which are a component of the overall inflation calculation.
Expanding on the given points, options like a cold weather increase that causes a rightward shift in the demand for heating oil would indeed lead to higher equilibrium prices. This is a clear example where the cost of a key commodity, like oil, pushes up prices across the economy, contributing to cost-push inflation.