International Trade Simulation Memo

International Trade Simulations Memo
Team B
Eco 212
March 24, 2010
Dr. Krissa Wrigley
To: Dr. Krissa Wrigley
From: Team B
Date: March 24, 2010
Re: International Trade Concepts Simulation and Principles of Economics
International Trade Simulation Memo
International trade has advantages and disadvantages as seen in the International Trade Concepts simulation. The simulation teaches that each country needs to know whether their products have absolute or comparative advantages before they begin to export and import goods. Additionally, when trade occurs between countries it is essential that governments know how foreign exchange rates are influenced because this could affect their profits. After the simulation, Team B debated about how government decisions on immigration policies effects economic behavior. The team also chose one trade topic from the World Trade Organization (WTO) and described why it is valuable.
Advantage and Limitation
The largest advantage of international trade is wealth. When a country can produce a product in which they have the comparative advantage, it brings with it possible wealth. Tariffs can add limitations. In the end it raises the price that consumers pay and could wipe out any advantage the county had. Trade allows countries to access a larger variety of goods while boosting economies, but some times it costs them to do so.
Absolute and Comparative Advantage
The first part of the simulation taught about comparative and absolute advantages. To determine what country had a comparative advantage, it had to be understood that to have this type of advantage a county would have to produce a specific good at a lower cost than other countries. For example, if Suntize specialized and spent less in producing electronics than its neighboring countries, Suntize therefore had the comparative advantage. The simulation supports what Mankiw said on how, “International trade can raise living standards in all...