International Trade Concepts Simulation, Economics 372, University of Phoenix

This assignment consisted of using a simulation pertaining to international wiliness advantages and limitations of international trade for the country of Rodamia. The simulations serve to familiarize the learner with the tools of international trade the government uses for the good of the economy. The first percentage of the simulation involves the evaluation of products to produce within Rodamia and products to import base on the Production Possibility Frontier (PPF). Due to relative advantage, Rodamia should export cheese and DVD pseudos, and import give whisky and watches. The corn and cheese trade partner is Uthania, while the DVD player and watches trading partner is Suntize. This decision is based on the mountain missionary work Report and the PPF, both showing the opportunity be for each country?s production.

The second and third part of the simulation concentrate on decisions regarding tariffs and quotas. Since the dumping margin may be an ongoing variance, Rodamia should impose an anti-dumping tariff for watches at $40 a unit, or 25% of export price. The Trade Commission reports indicate that a tariff will lower imports and profit domestic supply. The government gains profits to offset any evil in consumer surplus. Imposing a small tariff of 6% on imported corn from Ulthania and Alfazia protects Rodamia?s young corn industry until it can become more competitive.



The loss in consumer surplus and increased price in corn ar negligible when compared to the long-term gains.

The simulation acknowledges Free Trade Agreements, which should be made with both Uthania and Alfazia. The country profiles showed restrictions in trade that were in addition limiting opportunities for Rodamia. Free Trade Agreements will increase the people of trade and enable a flow of investment among countries.

The advantages of International Trade identified in the simulation include Rodamia optimizing its wealth by using resources as efficiently as...

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