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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?
The price of rubber in China (Click to select) did not change decreased increased.
The quantity of rubber exchanged in China (Click to select) decreased did not change increased.
What implications do you think the elimination of the quota on rubber had on China's social welfare?
Social welfare in China (Click to select) did not change increased decreased.
Consider a bond market. Show graphically and explain how each of the following changes would affect bond price, quantities traded and yield.
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