International of Trade
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- Date Submitted: 04/29/2010 09:53 PM
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International Trade
ECO
International Trade
With the globalization of the economy, international trade is becoming more common and important to the economies of individual nations. In this paper Team B will identify the advantages and limitations of international trade as well as the differences between comparative and absolute values. Team B will also summarize the decisions each team member made in the international trade simulation. Team B will evaluate the effects of government policy on economic behavior and influences affecting foreign exchange rates. Finally, Team B will describe the topic of anti-dumping rules as described on the World Trade Organizations website and what the team learned from the website.
Advantages and limitations of international trade
International trade has advantages and limitations for the different groups involved. One advantage for the country importing goods is a reduction in the price of goods for the consumer. Another advantage to the exporting country is the increased demand that in turn increases production. International trade also has its limitations for the same groups involved. The importation of goods is also a limitation for the country because it limits the demand for domestically produced goods.
Absolute and comparative advantage
One major point from the reading assignments that was emphasized in the simulation is absolute advantage versus comparative advantage. Absolute advantage is the ability of a country to produce a good at a lower cost in terms of real resources than another country (Mankiw, 2007). However, the absolute advantage is not how countries decide what to import and export. Instead, countries use comparative advantage which is the ability to produce a good at a lower opportunity cost, when deciding whether it is to the country’s advantage to import or export a good.
Results of the International Trade Simulation
Each member of Team B went through the International Trade...
ECO
International Trade
With the globalization of the economy, international trade is becoming more common and important to the economies of individual nations. In this paper Team B will identify the advantages and limitations of international trade as well as the differences between comparative and absolute values. Team B will also summarize the decisions each team member made in the international trade simulation. Team B will evaluate the effects of government policy on economic behavior and influences affecting foreign exchange rates. Finally, Team B will describe the topic of anti-dumping rules as described on the World Trade Organizations website and what the team learned from the website.
Advantages and limitations of international trade
International trade has advantages and limitations for the different groups involved. One advantage for the country importing goods is a reduction in the price of goods for the consumer. Another advantage to the exporting country is the increased demand that in turn increases production. International trade also has its limitations for the same groups involved. The importation of goods is also a limitation for the country because it limits the demand for domestically produced goods.
Absolute and comparative advantage
One major point from the reading assignments that was emphasized in the simulation is absolute advantage versus comparative advantage. Absolute advantage is the ability of a country to produce a good at a lower cost in terms of real resources than another country (Mankiw, 2007). However, the absolute advantage is not how countries decide what to import and export. Instead, countries use comparative advantage which is the ability to produce a good at a lower opportunity cost, when deciding whether it is to the country’s advantage to import or export a good.
Results of the International Trade Simulation
Each member of Team B went through the International Trade...