Final answer:
Licensure requirements can decrease the number of day-care centers by creating barriers to entry and thereby shifting the supply curve to the left, leading to higher prices and less competition.
Step-by-step explanation:
Licensure requirements to legally carry out a task, like those for operating a day-care, can decrease the number of day-care centers by creating a barrier to entry. When the government implements such regulations, the supply curve for day-care centers shifts to the left. This shift indicates that at any given price, there are fewer day-care centers able to provide services due to the increased burden of meeting licensing criteria. The result can be higher prices for consumers and reduced competition, as new entrants find it more difficult to start and legally carry out operations in the industry.
For example, if the government requires more stringent academic training, certificates, or licenses for day-care providers, the number of qualified day-care centers available to offer services would decrease. On the flip side, if the government were to subsidize training or reduce the qualifications required, this could have the opposite effect by shifting the supply curve to the right, potentially increasing the number of providers in the market.