International Trade Simulation
ECONOMICS FOR BUSINESS I ECO/360
March 27, 2007
International Trade Simulation
A part of a countries economic growth depends on the evaluation of the natural resources of the country. The need to consider trading with other countries evolves with the need for optimizing each countries assets and improving on the limited resources. The simulation, “Applying International Trade Concepts” provides an opportunity to understand the impact of international trade decisions towards the economy. The simulation drives the explanation of the advantages and limitations of international trading. Also, it emphasized key point’s imperative to the economic status. The awareness of opportunity cost, comparative advantage, efficiency, and how trade leads to efficiency were points illustrated throughout the simulation. Finally, the simulation allowed a conception summary in which to view the results of the decisions made during the exercise.
The simulation, “Applying International Trade Concepts” provided the country of Rodomia. Throughout the simulation, decisions pertaining to the effects of international trade are illustrated. Since the small country Gross Domestic Product is thirty percent agriculture products, the resolution to explore international trading with there neighboring countries is concluded. The advantages to trading with the neighboring countries involve increasing production opportunities of products for both countries. Determining the comparative advantage for Rodomia is the first step. The decision to import corn and watches while exporting cheese and DVD players is made to give Rodomia the comparative advantage. The comparative advantage is gained by exporting the cheese and DVD players since production in Rodomia is at a lower opportunity cost. Furthermore, the importing of the corn and watches at a lower opportunity cost than the other countries adds to Rodomias comparative advantage.
Some of the offsets of...