You're proving yourself a simpleton.
A company's goal is to make money, and a well managed one makes as much money as possible. It shouldn't be that hard to understand that if a product costs more to produce, it will correspondingly be need to be sold at a higher price. This seems pretty obvious to me, but I guess for others this is just a complicated concept.
Businesses set their prices to make the most money, since this is in fact their purpose. The optimum, or the equlibrium price, is set where the supply and demand intersects in order to avoid either a surplus or shortage. If the price is set too high, the company will experience a surplus. If the price is set too low, the company will experience a shortage.
How does increased production effect supply and demand? The supply will move up (, or left depending on how you look at it).

You can see in the chart how increased production effects the price. S0 represents the original supply; St represents the supply after the union is implemented. You should be able to see why a business has to raise prices when production costs increase, but I won't take anything for granted

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Let's pretend for a second that an idiot business were to keep it's price the same. In the above supply-demand example, that would mean leaving it at P0. If you were to translate the price of P0 to the supply of St, you can see there would be excess demand. In other words, the company wouldn't be able to keep up with the demand. It would experience a shortage and would sell a fewer quantity as well. This not only negatively impacts the business in reduced profits, but also consumers.
This shortage situation happened in the Dirty South in the gasoline market a few years ago. A hurricane broke a gas line, which significantly reduced the supply of gas in the southern states. Gas stations did not adjust, and kept gas prices the same. The result was a shortage. People couldn't get to work, because they're wasn't any gas. Other's just lined up for days waiting for the next shipment. If you were alive in the '70s, you should remember gas lines that were the result of price fixing by the federal government.
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