Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause
A) an increase in the supply of piercings and a lower price for piercings.
B) an increase in the supply of piercings and a higher price for piercings.
C) a decrease in the supply of piercings and a higher price for piercings.
D) a decrease in the supply of piercings and a lower price for piercings.

Question

Quizplus · Accepted Answer

The new law increases the costs for piercing studios, leading to a decrease in supply, which typically results in higher prices.

Suppose a New Law Requires All Piercing Studios to Pass