International Trade Simulation
Week 8 Eco 212
The international simulation report is a compilation of the findings and outlines that reflect advantages and limitations of international trade as a whole. After reading the international trade simulation I did find that there are four distinct points that represent the elements that make up the report. I will be reviewing each point in depth along with providing a compare and contrast of the influences and advantages. I will finally end with a discussion that brings to light the issues surrounding the international trade report and provide a summary.
The economy of Rodamia relies on three main areas: agriculture, industry ...view middle of the document...
This agreement is signed, allowing each nation to buy bulk product thus lowering their price with a greater volume or taxes omitted on these goods and services omitting additional expenditures. A nation’s partaking in the Free Trade Agreement is appealing to various nations since it gives them the prospect to have more trading cohorts and then other nations want participation also to lead to an expansion of the market.
In this age of globalization, the economies of the world are becoming more integrated and countries are increasingly engaging in international trade. Rodamia is no exception. Its most obvious trading partners will be Suntize, Alfazia and Uthania. International trade occurs because different countries have different comparative advantage. Comparative advantage arises when countries experience different opportunity costs when producing the same goods. For example, China has comparative advantage in producing agricultural goods when compared to a country like Singapore. This is because China is a large country with a large population and a lot of land available for plantation. On the other hand, Singapore is a small country with scarce land and a small population. As such, China is able to produce more agricultural products at a cheaper price with its cheap labor, and can devote the rest of its money to production of other goods. On the other hand, Singapore has to give up the production of a lot of goods should it decide to devote its land to agriculture. Therefore, this shows that China has a comparative advantage when it comes to the production of agricultural goods. Then again, absolute advantage occurs when a country is able to produce more products using a lower amount of resources when compared to another country. For example, America is able to produce more cars using fewer resources than
Trade conditions were analyzed in the International Trade Simulation between four countries, Rodamia being the country in which decisions are made to stop or continue trade with surrounding countries. The simulation shows a variety of situations where trade agreements are created, cutoff, and strengthened displaying different options and different outcomes to the decisions made. The simulation demonstrated how international trade increases the production of goods within a country, lowers the cost of products difficult or impossible to produce in that country, and can strengthen the relationship between countries. At...