Chinaâ??s entry into the World Trade Organization (WTO) is likely to create more competition between local and foreign firms, as well as provide China greater access to the market of exports. This is particularly true in the market for rubber since China is the worldâ??s second largest consumer of rubber. According to the WTO, China plans to eliminate its import quota on rubber over the next five years. What impact is the import quota reduction likely to have on the price of rubber and the quantity of rubber exchanged in China? What implications will the elimination of the quota on rubber have on Chinaâ??s social welfare?
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Import quotas limit the import of a particular product. Once the limit is reached, no additional rubber can be imported. This has the effect of driving up domestic prices. Domestic rubber producers can charge a higher price than they could otherwise as long as there is sufficient demand. Those needing the rubber must will bid up the ...
Solution Summary
How the elimination of an import quota affect prices and quantities sold.
... The essential feature of a quota is that it ... beyond the scope of this class), import quotas are viewed as being less efficient than are import tariffs and a ...
... governments prefer quotas to tariffs because quotas provide additional ... c. a quota is a quantity limitation on ... a nation is exporting more than it is importing. ...
... initial tariff agricultural commodities (including quotas) and, rate ... quite low, but the over-quota tariff is ... Tarrification of Explicit import quotas used to be ...
... to endorse the US's commercial struggle against EU The elimination of export ... or other non commercial shipments to determine it as part of their import quota). ...
... whole point of trade barriers, including quotas, tariffs, and export restraints, to reduce the imports of a ... Thus, the elimination of a trade barrier (like ...
... 40. Regarding tariffs and quotas: a. domestic producers prefer quotas to tariffs because the quota raises the price of an imported good and tariffs ...
... To properly evaluate the quotas in Mexico were eliminated ... that the US increased its net live cattle the quota. ... in December and January have imports from Canada ...
... Officials are now realizing how the elimination of trade barriers will improve the economy and benefit ... Tariffs and quotas do safeguard import jobs in the ...
