International Trade

International trade simulation

University of Phoenix

INTERNATIONAL TRADE SIMULATION

In most countries, there is a supply and a demand, countries that demand a particular good but do not have the necessary commodities to produce that good will have to look else where to satisfy this demand. With any trade, there are advantages and disadvantages, the advantages in international trade are that one country has the opportunity to move some of its surplus to other country who may be lacking in that particular commodity. Another advantage is that if your country is in need one can work out an agreement to import what the one country has and export your surplus so that it is a win-win situation for both parties. The disadvantages of this is that the other country can dump there excess surplus into your market which will lower the cost of that item and your country will have to take the loss in its market. Disadvantages may also be in the form of the amount one country is supplying to another country. This may also work just the opposite of dumping. If one country limits the imports into the country the price will begin to rise, the demand will increase, and the importing country can demand that more is paid for that particular item.

Key items discussed in the simulation were, the theory of comparative advantage, which is the specialization in production and exporting of commodities that can be produced at a lower opportunity cost. The second is tariffs; a tariff is the taxation of a good before it is imported into the country. This is usually used to limit the input into a country to protect a certain product or to restrict a country because of issues that have arisen in the past. Imposing a tariff, can invite retaliation from the other country and can affect the exports into that country. This also can neutralize any comparative advantage one country has over another. The third item is opportunity cost, this is the cost that one forgoes to take advantage of another item. The last key item is the Production possibility; this is the description of trade-off, the trade-off is between two goods and allows a comparison of the quantity that an economy can produce.

In my work place these process could be used similar to how we assist other school districts in the case of a break down with there school buses and they are further than an hour away from there home base. Our policy is to help other districts with any repair necessary and to get them back on the road in a prompt time. This policy is one that all Colorado school districts use and we have helped other districts out repeatedly.

In the simulation, my first step was to implement a free trade between Uthania and Suntize, with that trade decision Rodamia exported cheese and DVDs, and imported corn and watches. During 2xx4 it was found Suntize was dumping watches into Rodamia's market and I imposed a tariff on there goods. I chose a tariff of