International Trade

International Trade Simulation and Report

Krystil Hargiss, Sheila Zablocki, Casey Powell, Heather Reed

Economics 212

Johnny Shull

March 8, 2010

International Trade Simulation and Report

Concept Summary results from four team members from the International Trade simulations were evaluated. Learned from the International Trade Simulation were advantages and limitations of International Trade. Four key points were emphasized in the simulation. Noted are influences affecting foreign exchange rates and issues surrounding International Trade. Explained are absolute and comparative advantage and what the World Trade Organization (WTO) is.

Advantages and Limitations of International Trade

The International trade has at least one advantage as identified in the simulation, each country increases its production by specializing in products it produces most efficiently. This in turn, increases its wealth by trading those products for products cannot be produced as efficiently. If a country has excellent soil for planting cotton, they trade the product on the market with other countries to see how much cheaper they can make that product. This can bring in more wealth for trading, and in return, import a product they cannot produce as well.

Limitations on international trade like tariffs and quotas, voluntary restraint agreements, embargos, regulatory trade restrictions, and nationalistic appeals can offer protection in some situations and can be beneficial, but they can become harmful to both parties if these tools are used in retaliation.

The tariff is a tax levied on imported or export goods. Two different types of quota limitations to international trade are import quota and tariff-rate quota. Import quota is the amount of goods imported at one time. Tariff-rate quota is a policy used to protect a domestically produced commodity or product from competitive imports.

Key Points Emphasized in the Simulation

The four key points emphasized in the...