Applying International Trade Concepts Simulation

The International Trade Concepts simulation helps one to learn the advantages and limitations of international trade. One can also take what is learned from the simulation and relate it to the U.S. economy and the effects international trade has on it. Learning about how fiscal and monetary policies affect the exchange rate is important as well. Not only can one apply what was learned in the simulation to the U.S. economy but they can also apply it to their workplace. The Concept Summary of the simulation helps to make these applications.

Advantages and Limitations

International trade has advantages for every country. Other countries may produce certain goods more efficiently than another and trade allows these goods or products to be imported. This gives the consumer more choices in terms of prices and quality. This also allows the countries capital to receive new avenues for investment. Each country can then gain more wealth and use its resources more efficiently by engaging them into the production of goods which in which it will have a comparative advantage. In the simulation Rodamia may not have had an absolute advantage of either cheese or corn, but it was able to maximize benefits from trade by specializing in the production of goods in which it has a competitive advantage.

International trade also has limitations for every country. Countries may decide to use others as places to “dump” products and they might also charge tariffs or require quotas. When a country “dumps” into another country there might be an investigation. In the investigation 3 facts must be proven: that the product is being sold in the importing country at prices less than the domestic price of the product, that the availability of the product at those lower prices causes material injury to the domestic industry in the importing country, and that there is a casual link between the availability of the product at the lower price and the material injury to domestic industry (University...