Applying International Trade Concepts Simulation

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//Before scripting about this paper, one must gather some information about international trade from the simulation linked with this question. There should be some description about advantages and limitations of international trade. In the following paragraphs, I would like to provide an insight on these topics. //

Simulation - International Trade

Basic objective of the international trade is to get the benefits of the comparative advantages of the country. International trade is the process of exchanging goods, capital and services between different countries. Following are the advantages of the international trade according to the simulation -

1. Economic of scale - International trade helps to get the economic of scale for a country. Industries can produce more efficiently with the help new technology. In international trade, a country concentrates on the production of those things in which it has comparative advantage than other countries. In simulation, Rodamia is producing cheese rather than corn because it has comparative advantage in its production.

2. More choice for the customers - International trade provides a wide variety of quality and prices for the customers. Many international companies provide the product with different quality and lower price than the domestic prices.

3. Expansion of market - International trade provides an expansion facility to many countries. Different countries can expand their market throughout the international boundaries.

4. New investment - International trade tends to a huge capital investment in other countries. Many companies invest in those countries in which they can use their resources more efficiently and effectively.

5. Balance of trade - International trade also helps to maintain balance between import and export of a country (University of Phoenix).

Disadvantage of international trade -

1. Loss to domestic producers - International trade causes threats for the domestic producers because companies from outside the country establish their organization with a huge investment and new technologies.

2. Cut throat competition - Multinational companies ...