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Q. China's entry into the World Trade Organization (WTO) is likely to create more competition between local also foreign firms also provide China greater access to the marketplace for export. This is particularly true in the market for rubber since China is the world's second largest consumer of rubber. According to the WTO, China plans to eliminate its import quota on rubber over the next five yrs. Illustrate what impact is the import quota reduction likely to have on the price of rubber also the quantity of rubber exchanged in China? Illustrate what implications will the elimination of the quota on rubber have on China's social welfare? ELUCIDATE.
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If the government purchases also taxes are both increased by $100 billion simultaneously illustrate what will the effect be on equilibrium output.
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