XECO 212 Week 8 Assignment - International Trade Simulation - 16666

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XECO 212 Week 8 Assignment - International Trade Simulation

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International Trade Simulation

This writing will analyze the advantages and disadvantages of international trade between Rodamia and other countries around Rodamia along with absolute and comparative advantages with affected foreign exchange rates influenced. Based on the discussion it will provide possible recommendations to the President of Rodamia whether to trade globally or not. At times international trade becomes very crucial and essential as an economy runs on the basis of supply and demand. Similarly, for certain economies or countries it is not possible for the domestic suppliers to meet the domestic demand. Therefore, when the demand is not met by the current supply, the countries can opt for international trade. It is very important for many countries as it allows a country to import products that cannot be produced by the local firms. International trade has both advantages and drawbacks. Benefits of international trade include that it helps countries with excess stocks of certain product or service to trade with other countries which faces a shortage of that good and in turn they can supply those goods and services which it has excess supply. With this both the countries are better off and local demands are also met and customers are satisfied. Now coming onto the disadvantage of international trade, one of the major disadvantages is that there is a huge amount of surplus being exported to other countries from local countries, this can result in a major loss in the market. With this, the country’s growth and economic wealth is fostered, and country can also concentrate on increasing the production of resources or goods that the country can then export elsewhere. One drawback of International Trade might be that if a country decides to sell exported goods cheaper than it does to its local citizens, the locals may suffer and this is known as dumping.   Romadia has two options to protect it domestic firms, which are