International Trade Simulation Essay

988 Words Mar 22nd, 2009 4 Pages
The purpose of this paper is to summarize the International Trade Simulation, 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.
Simulation Summary
In the International Trade simulation, you are the Trade Representative of a small country called Rodamia. You are introduced to international trade--the theory of comparative advantage and the impact of tariffs, quotas, and dumping on international trade (Applying International Trade Concepts, 2003). In the first segment, it is your job to evaluate what products to produce within the country and what products to import based on the Production Possibility Frontier (PPF). Due
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Despite its negative effects, international trade can greatly improve the standard of life for many people. International trade boasts several advantages, through more choices to the consumer, bigger markets for producers to explore, and a more favorable balance of trade. However, while limitations on international trade, such as tariffs and quotas, voluntary restraint agreements, embargos, regulatory trade restrictions, and nationalistic appeals can offer protection in some situations and can be beneficial, they can become harmful to both parties if these tools are used in retaliation (Colander, 2004).
Key Points from the Reading Assignments Emphasized in the Simulation
There are four key points emphasized in the International Trade simulation. First of all, having a comparative advantage is the basis for international trade. It's the ability to be better suited to the production of one good than to the production of another good. Second, the Production Possibility Curve is a curve measuring the maximum combination of outputs that can be obtained from a given number of inputs. Third, the Principle of Increasing Marginal Opportunity Cost states that in order to get more of something, one must give up ever-increasing quantities of something else. And, fourth, limitations such as regulatory trade restrictions, tariffs, and quotas limit and sometimes prevent goods from being traded between countries.

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