International Trade Simulation Essay Sample

International Trade Simulation Pages
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List at least one advantage and one limitation of international trade you encountered in the simulation.

Define absolute and comparative advantage in your own words.

Explain how absolute and comparative advantages were used in your simulation.

Describe the influences affecting foreign exchange rates.

Dear President Jacobs,
My recommendations for international trade would be to be careful how high we make tariffs when dealing with the other countries. If we raise them too high we could lose revenue which means we will also lose money. If our neighbors cannot afford to pay the cost of the tariffs then they may choose to stop trade with us altogether or purchase less from us then before. I also would recommend that we have a quota so that we are not importing or exporting more than we can afford to so that we are not losing money that way as well. We may need to open free trade agreements at times as well in order to keep trade with our neighbors going. If we keep trade going with our neighbors all of the countries involved will benefit.

In this simulation one advantage I came across was fee trade agreements. I feel that free trade agreements are beneficial to all countries involved. It keeps trade open for the countries involved which can improve the economy of those countries. Free trade also allows those countries involved to trade openly without worry of high tariffs that will cost them more than they can afford.

In this simulation one limitation I came across was the fact that if we raise the tariffs too high then the other countries may not be able to afford to trade with us and we could lose out on both revenue as well as money that trade could bring us. We need to be careful how much we raise it and when we raise it so that the other countries can afford to pay the higher tariffs and that the raise in price benefits our country in the end. We do not want higher tariffs if they are not going to benefit us by bringing in more money for our economy.

Absolute advantage is the ability of our country to produce certain goods or services at a lower cost to us than any other countries that produce these goods and services.
Comparative advantage is the ability of our companies to produce certain goods and services at a lower opportunity cost than other companies. This gives our companies the ability to sell these goods and services at a lower price than our competitors.

Absolute advantage was used in the simulation when we had a boom in corn production. Having the amount of corn that we did made it so that we could produce goods made of corn at a lower cost than our neighbors could. This helped our country bring in more money for the economy from trading corn to our neighbors.

Comparative advantage was used in the simulation when we

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