International Trade Simulation

1297 Words6 Pages
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 exporting to other countries. For some countries, this dumping of surplus causes a loss in the market. In this international trade simulation, I have been assigned the role of Chief Trade Advisor to the President of Rodamia. In this position, I am tasked with developing and coordinating international trade, investment policies, and lead the negotiations with other countries surrounding Rodamia. Rodamia is considerably larger than its surrounding countries (Alfazia, Uthania, and Suntize) and is considering trading with them to provide a more diverse and quality product to the country’s people. In this paper we are going to discuss some of the advantages and limitations of international trade encountered in “Rodamia and its neighbors” trade simulation as well as absolute and comparative advantages and the influences affecting foreign exchange rates. Before we get into the discussion of the exercise, we first need to understand what absolute and comparative advantages are. A comparative advantage... ... middle of paper ... products from other countries, all countries can sit on a gain. The advantage can be created by many factors including technology, efficiency, availability of product, and even natural resources. Over time the factors all change which leads countries to further negotiations. In this paper we have discussed the international trade simulation and the advantages or limitations of international trade. We also discussed comparative advantages and absolute advantages and the factors influencing the foreign exchange rates. Works Cited Applying International Trade Concepts. (2009). Retrieved July 19, 2009, from University of Phoenix: Mankiw, N. G. (2007). Principles of economics (4th ed.). Mason, OH: South-Western Cengage Learning.
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