Trade conditions were analyzed in the International Trade Simulation between four countries, Rodamia being the country in which decisions are made to stop or continue trade with surrounding countries. The simulation shows a variety of situations where trade agreements are created, cutoff, and strengthened displaying different options and different outcomes to the decisions made. The simulation demonstrated how international trade increases the production of goods within a country, lowers the cost of products difficult or impossible to produce in that country, and can strengthen the relationship between countries. At the same time, it also showed how limitations can be imposed on trade causing depletion in the …show more content…
In the simulation corn and cheese were two products mentioned in the trade agreement, if one of the four countries had soil that created better corn crop than that country would have the comparative advantage. Having this soil means that the farmers have to fertilize their fields less, the corn grows quicker, and it tastes better making corn their main crop and main export leaving little room for them to produce cheese. But cheese is still a necessity so this country must trade some of its corn for cheese this is their opportunity cost. If there is a neighboring country that has the comparative advantage on cheese these two countries could easily trade with each other lowering the price of cheese and corn in both …show more content…
For example, if three countries from the simulation were to produce the same good at the same quality and quantity it could reduce the foreign exchange rate even for the fourth country as well. This rate of exchange deems the value (on a global scale) of goods and therefore determines the quality and quantity of goods and services demanded. Having a way to decipher the rate of exchange allows countries to determine what and how much of it to trade internationally, this makes it simpler to figure out what a good or service is worth and to decide if it is worth trading for a particular good or service. This greatly affects the way in which the world trades goods because it gives an idea of what to trade and how much to trade of it to get the highest trade