International Trade Simulation Essay - 1294 Words

Every economy can count on two things; there will always be supply and there will always be demand. For some countries, supply cannot keep up with the demands for the economy and when that happens, international trade is sometimes an only option. As with anything in life, there are advantages and disadvantages to international trade. One of the major advantages to international trade is that it allows countries with a surplus of supply to trade with another country that may have a shortage of that same supply. Another advantage is that if a country is in short supply of a particular product or service that country can import from other countries. One of the major disadvantages to international trade is the amount of surplus countries are†¦show more content†¦Comparative advantages calculate opportunity costs involved with the overall production of the good or service. The absolute advantage refers to the ability to produce a good or service at a higher quantity than the comp etition, while at the same time utilizing the same amount of resources. This can also be stated as the ability to produce the same amount of goods or services using less input than the competition. In the â€Å"Rodamia and its neighbors† trade simulation, I came across a few advantages and disadvantages of international trade. First let’s talk about the simulation itself. The first step of the trade simulation involved deciding whether to import or export corn, cheese, DVD players, and Watches. I decided it was best to import corn and watches and export DVD players and cheese. This was an easy simulation because all I had to do was decide which items we had a comparative advantage with and which countries offered the best products at a lower opportunity cost. Even though Rodamia does not have the absolute advantage on corn or cheese, I was able to help maximize the countries benefits by specializing in the production of cheese which gave us a comparative advantage. The second exercise, Suntize was importing watches into Rodamia at prices lower than that of their own home market. The dumping of watches into Rodamia caused some harm within our domestic watch industry. In this simulation, I decided to impose a tariff of $30.00 perShow MoreRelatedEssay on International Trade Simulation987 Words   |  4 Pagessummarize the International Trade Simulation, explain the basic concept of International Trade, emphasize the four key points from the reading assignments in the simulation, and apply these concepts to my workplace. Simulation Summary In the International Trade simulation, you are the Trade Representative of a small country called Rodamia. 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