Final answer:
An increase in wages, which raises the cost of production, would cause some firms to incur economic losses and exit the market, leading to a leftward shift in the vertical supply curve.C is the answer.
Step-by-step explanation:
In order to shift the vertical supply curve to the left, a scenario must occur that reduces production capabilities or the willingness of firms to supply products at any given price level.
According to your choices, an increase in wages is an event that would accomplish this because it raises the cost of production for firms. This can lead to some firms making economic losses and consequently shutting down, thus reducing the overall market supply and shifting the supply curve to the left.
This is further affirmed as we see that a smaller labor force would also reflect a leftward shift in the aggregate supply (AS), which would reduce the equilibrium level of GDP and increase the price level. Therefore, the mentioned correct option in the final answer that would cause a leftward shift in the vertical supply curve is increase in wages and associated production costs.