International Trade Simulation: Rodamia
International Trade Simulation
07/22/2012
XECO/212
To: The President of Rodamia
International Trade Simulation Report
This simulation identified Rodamia’s bodering countries provide an opportunity for trade and investments that could benefit Rodamia. Trade with other countries would give consumers a bigger variety of choice as far as price and goods. Domestic producers will increase production to keep up with the market demands in other countries. This would produce more capital for investing in new avenues. The interaction of trade between countries will increase the country’s wealth.
There are different limitations that can be placed on trading. These are tariffs, quotas, and regulations. These offer protection under certain circumstances, …show more content…
Absolute advantage shows the difference in measuring the labor productivity of the product that can best be put out with the contrast of other products the country can put out using the same resources. Two methods can help in measuring each product produced. One way is using the number of units put forth in one hour of labor or by the number of hours it takes to produce one unit of output. The product that produces at a better and most efficient level with less productivity cost is the product for trade.
Comparative advantage has the power to evaluate the opportunity cost given up for the production of one product to the other as long as both countries can gain from a trade. In comparing corn and cheese, it showed the comparison of the benefit by reducing production on cheese and the quantity change in a bushel of corn. While both products can be produced in the same country, it was proven that corn had the comparative advantage over cheese. Reducing the labor from producing cheese to better the labor in producing one more bushel of corn had a higher productivity level at a lower opportunity …show more content…
Therefore, governments should only get involved when evaluation of the exchange rate shows fluctuations beyond or under the value of the dollar. Determinants in long run exchange rates preserve the rise and lowering of rates. A fixed exchange rate will distress supply and demand which may cause a surplus or a possible shortage in the economy. Government policies have a direct effect on production and employment which can be positive or negative. Currently the business cycle is in a recessionary trough with high unemployment and expansionary policies. An example of this expansionary policy would be lowering interest rates. These are being implemented in order to raise the demand for products and to decrease
07/22/2012
XECO/212
To: The President of Rodamia
International Trade Simulation Report
This simulation identified Rodamia’s bodering countries provide an opportunity for trade and investments that could benefit Rodamia. Trade with other countries would give consumers a bigger variety of choice as far as price and goods. Domestic producers will increase production to keep up with the market demands in other countries. This would produce more capital for investing in new avenues. The interaction of trade between countries will increase the country’s wealth.
There are different limitations that can be placed on trading. These are tariffs, quotas, and regulations. These offer protection under certain circumstances, …show more content…
Absolute advantage shows the difference in measuring the labor productivity of the product that can best be put out with the contrast of other products the country can put out using the same resources. Two methods can help in measuring each product produced. One way is using the number of units put forth in one hour of labor or by the number of hours it takes to produce one unit of output. The product that produces at a better and most efficient level with less productivity cost is the product for trade.
Comparative advantage has the power to evaluate the opportunity cost given up for the production of one product to the other as long as both countries can gain from a trade. In comparing corn and cheese, it showed the comparison of the benefit by reducing production on cheese and the quantity change in a bushel of corn. While both products can be produced in the same country, it was proven that corn had the comparative advantage over cheese. Reducing the labor from producing cheese to better the labor in producing one more bushel of corn had a higher productivity level at a lower opportunity …show more content…
Therefore, governments should only get involved when evaluation of the exchange rate shows fluctuations beyond or under the value of the dollar. Determinants in long run exchange rates preserve the rise and lowering of rates. A fixed exchange rate will distress supply and demand which may cause a surplus or a possible shortage in the economy. Government policies have a direct effect on production and employment which can be positive or negative. Currently the business cycle is in a recessionary trough with high unemployment and expansionary policies. An example of this expansionary policy would be lowering interest rates. These are being implemented in order to raise the demand for products and to decrease