The pros and cons of the removal of quota on sugar, in both the short run and long runs.

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Chapter 18, Problem 4DQ

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To describe:The pros and cons of the removal of quota on sugar, in both the short run and long runs.

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Import quotas and import tariffs have qualitatively similar effects on equilibrium outcomes in competitive markets. True False

China’s entry into the World Trade Organization (WTO) in 2001 created more competition between local and foreign firms, and also provided China greater access to the market for exports. This was particularly true in the market for rubber since, at the time, China was the world’s second largest consumer of rubber (China is now the world’s largest consumer of rubber). Shortly after joining the WTO, China eliminated its import quota on rubber. What impact do you think the import quota reduction likely had on the price of rubber and the quantity of rubber exchanged in China? What implications do you think the elimination of the quota on rubber had on China’s social welfare?

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