This memo will summarize the International trade simulation that was taken for week five of Economics 360. This memo will also identify the advantages and limitations of International Trade in the simulation as well as list the four key points that were emphasized during the simulation. The concept summary results will also be summarized and how what was learned during the simulation can be applied to my workplace.
There are differences in comparative advantages because each country has a different mix of natural resources and factors of production. Comparative advantages derive from many factors such as natural resources, availability and relative efficiency of factors of production, and the state of technology. These can also change over time, which is why the composition of a country's trade could change over time. A labor-intensive country that has fertile soil and a good climate for growing would have a comparative advantage in producing agricultural goods.
An underdeveloped country may not have fully utilized resources due to capital shortages, primitive technology, and a small economy size. International Trade is able to help these countries develop changes in the distribution of the labor force.
Rodamia had a comparative advantage of corn and cheese by foregoing more corn for less cheese means that the comparative advantage lies in corn production. The country should then export corn and import cheese. Suntize had an advantage in producing electronic goods while Uthania had an advantage in both agriculture and electronic goods.
The four key concepts that were emphasized during the simulation are; quotas, regulatory trade restrictions, tariffs, and balance of trade.
Trade policy does not affect my current work place. I now understand how trade policies work. Before the simulation, I never gave a thought of how trade worked or how it influenced a countries economy. Going through this...