International Trade Simulation
January 22, 2012
This is a report for the President of Rodamia to discuss the advantages and the disadvantages of international trade between Rodamia and the surrounding countries around Rodamia. This report is also going to discuss the absolute and comparative advantage. Based on the information from this report, there is going to be a possible recommendation to the President of Rodamia whether or not to trade internationally. There are times international trade becomes very important and vital to a countries economy because most economies operate on the basic economic principal of supply and demand. It is not possible for every country’s domestic supplier to meet the domestic demands of that country and when this happens, that country can opt for international trade. Many countries chose international trade because their domestic suppliers are not able to produce the goods that can be brought in from other countries. However international trade has advantages and disadvantages.
One advantage of international trade is that Rodamia could import goods that are made more efficiently by other countries. Our domestic suppliers may not have the equipment or man power to make certain goods and trading internationally allows Rodamia to give its consumers more options at lower prices. By allowing other countries to trade with Rodamia, this allows domestic suppliers to create goods and have excess stock of a certain good. When the country for which Rodamia is trading with runs out of that particular good, they can trade with that country in return for their goods and services. This provides new avenues for investment for Rodamia’s suppliers and expands Rodamia’s domestic suppliers markets. One disadvantage of trade is the huge export of surplus to other countries that could result in a major loss in Rodamian markets and could result in a major loss for our Rodamian producers. When this...