Postal worker compensation rises each year due to cost-of-living increases, which raises the U.S. Postal Service's production costs. Holding demand for postal services fixed, what happens to the supply curve for postal services, and to the equilibrium price and quantity?

1. Labor compensation is a production cost, making this a supply-side event. 2. Higher costs lower the quantity the Postal Service is willing to supply at every price, shifting supply left. 3. A leftward supply shift moves the new equilibrium up along the unchanged demand curve. 4. Quantity falls while price rises, since fewer postal services are offered but buyers bid up the reduced supply. 5. Options C and D get at least one of the two directions wrong. _Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.3 | Changes in Equilibrium Price and Quantity: The Four-Step Process_