One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that
A)the supply of child care services will increase, thus lowering the price of child care services.
B)the supply of child care services will be unaffected by the stiffer requirements and therefore the price of child care services will not change.
C)the demand for child care services will fall because people who buy child care services do not want stiffer requirements placed on child care providers.
D)the supply of child care services will decrease, thus raising the price of child care services.

Question

Quizplus · Accepted Answer

The new requirements will likely increase the cost of providing child care services, possibly causing some providers to leave the market. With the decrease in supply, the price of child care services is likely to go up. Additionally, there may be higher barriers to entry for new child care providers, further decreasing the supply of services. Therefore, the supply of child care services will decrease, raising the price of child care services.

One Reads in the Newspaper: "Today the President and Congress