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Government regulations in Australia on the educational qualifications of those working in childcare centres require higher levels of formal training than a few years ago.

Government regulations in Australia on the educational qualifications of those working in childcare centres require higher levels of formal training than a few years ago. Suppose that these regulations increase the quality of childcare and cause the demand for childcare services to increase. At the same time, assume that complying with the government regulations increases the costs of childcare businesses. Draw a demand and supply graph to illustrate the effects of these changes in the market for childcare services. Briefly explain whether the total quantity of childcare services purchased will increase or decrease as a result of the regulations.

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