Paying higher sometimes cause a dip in supply because they raise the of production.

Paying higher sometimes cause a dip in supply because they raise the cost of production.

Explanation:

Once the wages are raised, the capital that could have been used to obtain supplies now goes to the wages.

The supply sector dips thereby leading to low production and at last low returns.

Foe instance if wages of workers in a sugar factory are raise, then the supply shall decrease due to the extra capital that shall be spent on the wages.