In Louisiana, florists must be licensed by the state. In many states, auctioneers must be licensed as well. Barbers and beauticians are also often subject to licensing. Trade groups will usually say that these regulations are to ensure quality. What else might be at work? Does this hurt consumers? How does it affect the market? (Use a supply and demand diagram to answer.)
In Louisiana, florists must be licensed by the state. In many states, auctioneers must be licensed as well. Barbers and beauticians are also often subject to licensing. Trade groups will usually say that these regulations are to ensure quality. What else might be at work? Does this hurt consumers? How does it affect the market? (Use a supply and demand diagram to answer.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In Louisiana, florists must be licensed by the state. In many states, auctioneers must
be licensed as well. Barbers and beauticians are also often subject to licensing. Trade groups will
usually say that these regulations are to ensure quality. What else might be at work? Does this
hurt consumers? How does it affect the market? (Use a
Expert Solution
Step 1.
Professional licensing increases the cost of doing business, so producers decrease output. As a result, market supply decreases, which causes supply curve to shift left. Price increases and quantity decreases.
Higher price and lower quantity decreases consumer surplus, which hurts consumers.
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