International Trade Simulation and Report The advantage of international trade is countries with certain quantity, quality, and efficient production of goods and services can maximize their country’s wealth. Developing country’s increase sales and revenue through production expansion. International trade increases a country’s gross domestic product (GDP) by increasing the production of products sold to other countries. The free trade agreement between Rodamia, Uthania, and Suntize allowed each country to more efficiently use their resources to increase wealth through the comparative advantage of their export commodity. The flipside of international trade is another country’s ability to produce an export more efficiently than the importing country, causing domestic producers and firms to lose revenue or the opportunity for additional revenue. For example, if Rodamia continues a free trade agreement with Uthania for imports of corn, Rodamia misses the opportunity to become a large producer and net exporter of corn – hurting domestic producers and firms. To counteract the loss of increase revenue for domestic producers and firms, the Rodamia government can impose a tariff – place a tax on the corn or limit the amount of corn imported from Uthania – a quota. The government placing a tariff or quota on corn imported from Uthania protects domestic producers and firms from cheaper imports of corn and affords time to develop efficiency in the production of corn. In retaliation, Uthania may decide to impose a tariff or quota on exports from Rodamia. For both countries, the price of imports increases and consumer surplus decreases. Tariffs and quotas restrict free trade and diminish revenue.
Trade Simulation Here are four key points that we found in our reading. First point is the Comparative Advantage