International Trade Simulation
Thomas Ralston
XECO212
November 4tn, 2012
Tonya Wilhelm

International Trade Simulation
In order to take the next step in economic success Rodamia will need to analyze the advantages and limitations of international trade. Rodamia has the benefit of having the largest land mass compared to our neighbors. As a country we rely on three main areas for economic stability. These areas are agriculture (corn, wheat, and cotton), services, and industry. Neighboring countries Alfazia, Uthania, and Suntize vary in size and economic stature. Alfazia mainly relies on the strength of agriculture, while Suntize is a hot bed for tourist attractions, finally Uthania who is known for its confectionary chocolates also relies on its strong industrial sector. While looking at opening up international trade with more than just our neighbors is the long term goal, short term results can be had from dealing with them.
Countries who rely heavily on international trade do so because of what is known as comparative advantage. Comparative advantage is can when a situation such as a country can produce a good at a lower opportunity cost than a competitor. This advantage comes about because some countries experience different costs when manufacturing the same goods. Absolute advantage is when the country's ability to produce a good or service at a lower cost per unit than the cost any other country produces that good or service. This occurs when a country is able to manufacture more products using a lower amount of resources compared to another country. In Rodomia's case incentives should be given to export cheese and DVD players since there is a comparative advantage in these areas. Key countries we should import from are Uthania which has a strong production of corn, and Suntize which has the ability to produce DVD players. Currently Alfazia