International Trade Simulation

Essay by pinchetteUniversity, Bachelor'sA+, July 2006

download word file, 5 pages 5.0


The purpose of the International Trade Simulation was to learn and 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.

International Trade Simulation


The simulation is assigned to familiarize one with the tools of International trade that government uses to keep the economy moving ahead. The theory of comparative advantage and the impact of tariffs, quotas, and dumping on international trade were introduced. I will evaluate the country's products to produce within the country and what products to import based on the Production Possibility Frontier (PPF). I will also make decisions pertaining to tariffs and quotas. This simulation also introduces the usage of free trade agreements.

Summary of Simulation

There are differences in comparative advantages because each country has a different mix of natural resources and factors of production. 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. Comparative advantages develop from many factors such as natural resources, availability and relative effectiveness of factors of production, and the state of technology. These can also change over time, which is why the organization 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 shortages in capital, under developed technology, and a small economy size. International Trade is able to help these countries develop changes in the division...