International trade simulation
University of Phoenix
INTERNATIONAL TRADE SIMULATION
In most countries, there is a supply and a demand, countries that demand a particular good but do not have the necessary commodities to produce that good will have to look else where to satisfy this demand. With any trade, there are advantages and disadvantages, the advantages in international trade are that one country has the opportunity to move some of its surplus to other country who may be lacking in that particular commodity. Another advantage is that if your country is in need one can work out an agreement to import what the one country has and export your surplus so that it is a win-win situation for both parties. The disadvantages of this is that the other country can dump there excess surplus into your market which will lower the cost of that item and your country will have to take the loss in its market. Disadvantages may also be in the form of the amount one country is supplying to another country. This may also work just the opposite of dumping. If one country limits the imports into the country the price will begin to rise, the demand will increase, and the importing country can demand that more is paid for that particular item.
Key items discussed in the simulation were, the theory of comparative advantage, which is the specialization in production and exporting of commodities that can be produced at a lower opportunity cost. The second is tariffs; a tariff is the taxation of a good before it is imported into the country. This is usually used to limit the input into a country to protect a certain product or to restrict a country because of issues that have arisen in the past. Imposing a tariff, ca ...