Xeco/212 International Trade Simulation

Topics: International trade, International economics, Economics Pages: 3 (1088 words) Published: May 19, 2012
International Trade Simulation
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 the same time, it also showed how limitations can be imposed on trade causing depletion in the products seldom produced in that country, lower profit for producers who depend on exports, and restrictions such as, tariffs and quotas. In order to make the decisions requested in the simulation one must review the situation including the interest-rate and foreign-exchange-rate. The difference between absolute and comparative advantage was also covered in the simulation explaining how these play in the decision to trade or restrict trade with other countries. Advantage and Limitation of International Trade in the Simulation

In most situations trade is beneficial to all involved whether it be to make a profit or gain the products needed at a more affordable price. International trade has many advantages which benefit every country involved and others that only affect one country positively and the others negatively, this is seen in the beginning of the simulation with the trade of corn and cheese. In the international trade simulation the four countries all have cheese and corn to trade but only a couple had the advantage of being able to supply more allowing them to profit from the trade of either corn or cheese.

Along with the positives to international trade, it also has limitations that can lead to negative...
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