Hinduism

AXIA E CAMPUS

JENNYFER GALDON

INTERNATIONAL TRADE SIMULATION

JUNE 13, 2010

INTERNATIONAL TRADE SIMULATION

International trades have been happening for hundred of years, a country like Rodamia with poultry, agricultural products like corn, wheat, cotton and dairy can take advantage of trades. An international trade is the exchange of capital goods and services across international borders and territories. The risk on international trade cab be the buyer insolvency, Non-acceptance, Credit risk, Regulatory risk, Intervention by government authorities, Political risk and War and other uncontrollable events. On my simulation I encountered with intervention there was an investigation because of the extremely low price of the watches been imported from Suntize. For an international trade to take place there are trade models for example: absolute advantage: A country, individual, or firm has an absolute advantage in producing a good if production of the good absorbs fewer resources than are required in other countries or by other individuals or firms. Someone who is the best at doing something is said to have an absolute advantage. A comparative advantage: A comparative advantage in producing or selling a good is possessed by an individual or country if they experience the lowest opportunity cost in producing the good. Opportunity cost is the key to comparative advantage, Individuals and nations gain by producing goods at relatively low costs and exchanging their outputs for different goods produced by others at relatively low cost. All potential trading partners can gain enormously through appropriate specialization and exchange. Having a comparative advantage is not the same as being the best at something. In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it because of resources. The hecksche Ohlin model suggest that countries should produce and export goods that require resources that are...