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Instructions of ECO 201 2-2 Simulation Discussion
DISCUSSION
A difference in opportunity costs between businesses can lead to a comparative advantage in the production of a good and the decision to trade.
For this discussion, first, play the simulation games Comparative Advantage (Without Trade) and Comparative Advantage (With Trade) in the MindTap environment. Then, you will share your experiences playing the games. Your work in this discussion will directly support your success on the course project.
In your initial post, include the image of your simulation report in your response. See the How to Submit a Simulation Report Image PDF document for more information. Then, address the following questions:
Imagine you own your own business. How would you evaluate opportunity costs and comparative advantage when making business decisions?
Look up a Production Possibilities Frontier (PPF) graph. What role does the production possibility frontier (PPF) model have in making business decisions regarding specialization and trade?
In your responses, comment on the posts of at least two peers whose simulations had different outcomes than your own. Research and provide examples of companies in the news that are relevant to your peers’ comments on the value of comparative advantage for making their business decisions.
To access your simulations, click the simulation link found in the module.
To complete this assignment, review the Module Two Simulation Discussion Rubric.
Step-By-Step Guide on ECO 201 2-2 Simulation Discussion: Comparative Advantage
Introduction to ECO 201 2-2 Discussion
The ECO 201 Discussion centres around the concept of comparative advantage and opportunity cost in microeconomics, using interactive simulation games to illustrate these principles. By following this Owlisdom How-To Guide, you will gain a practical understanding of how businesses can use economic theories to make informed decisions about production and trade. ECO 201 2-2 Simulation Discussion: Comparative Advantage includes analysing business scenarios, reflecting on game outcomes, and applying theoretical knowledge to real-world business situations.
For this discussion, first, play the simulation games Comparative Advantage (Without Trade) and Comparative Advantage (With Trade) in the MindTap environment.
Participation in Simulation Games
Playing the Simulation Game: Comparative Advantage (Without Trade)
We must first play the simulation game without trade to start the ECO 201 2-2 Simulation Discussion: Comparative Advantage.
- Understand how individual production choices impact overall productivity without the benefits of trade.
- Engage with the simulation by making different production decisions and observing the productivity and resource allocation outcomes.
Playing the Simulation Game: Comparative Advantage (With Trade)
Next, in ECO 201 2-2 Simulation Discussion: Comparative Advantage. We will play the simulation with trade.
- Learn how trading can enhance productivity and efficiency for businesses.
- Participate in the simulation by implementing trade strategies and note the improvements in outcomes compared to the non-trade scenario.
Imagine you own your own business. How would you evaluate opportunity costs and comparative advantage when making business decisions? Look up a Production Possibilities Frontier (PPF) graph. What role does the production possibility frontier (PPF) model have in making business decisions regarding specialisation and trade?
Understanding the Production Possibilities Frontier (PPF)
In this section of ECO 201 2-2 Simulation Discussion: Comparative Advantage, we will discuss our understanding of the Production Possibilities Frontier by applying it to our business.
- Look up and include a basic PPF graph in your post. Describe its significance in demonstrating the two products’ trade-offs and potential maximum output.
- Using the PPF, discuss how a business can determine which product or service provides a comparative advantage, guiding decisions on specialisation and maximising efficiency.
Example
In accordance with the concept of comparative advantage, one should concentrate efforts in areas where they will yield the most significant impact (Learn Economics, 2022). We mean this by our capacity to produce something more quickly than others. It denotes the capacity to deliver an item using a reduced amount of resources. Consider that we are in the process of deciding what to make for dinner. You are a skilled chef, while I am not. You possess a greater capacity for preparing an exceptionally refined steak than I do. The term for this is “comparative advantage.”
The production possibility frontier (PPF) is a graphical representation that illustrates the potential quantities of two products whose manufacturing processes share a restricted resource (Bloomenthal, 2022). Furthermore, PPF plays a critical role within the field of economics. It could indicate, for instance, that the economy of a nation has achieved its highest level of efficiency possible. Economists and businesses utilise the PPF to imagine potential production scenarios through the modification of a number of resource factors. Companies may employ the PPF to ascertain the impact of various factors on production or to determine which products to develop. By utilising it, economists can assess economic growth and efficiency by selecting the quantity of one product a country can produce without producing another.
In your responses, comment on the posts of at least two peers whose simulations had different outcomes than your own. Research and provide examples of companies in the news relevant to your peers’ comments on the value of comparative advantage for making their business decisions.
Peer Responses
Responding to peers is one of the vital parts of the ECO 201 2-2 Simulation Discussion: Comparative Advantage. We need to provide at least two peer responses. I will provide one example post. You can write your peer responses by keeping the below points in mind.
- Review at least two peer posts with different simulation outcomes. Provide constructive feedback and compare their results with your own, emphasising different strategic choices.
- Research and provide real-world examples of businesses that illustrate the principles discussed in your peers’ posts. Use recent news articles or case studies to support your examples.
Response 01
Excellent Post! The curve of production possibilities is an economic instrument utilised to ascertain the utmost output that can be accomplished with a specified quantity of inputs for both goods. The information consists of any possible amalgamation of the following four production factors: enterprise, labour, capital products, and natural resources (Bloomenthal, 2022). An economic instrument, a production possibilities curve, illustrates the most efficient method of producing a specified pair of objects. An adjustment in resource allocation results in a proportional change in the total number of each product at each data point along the curve, as more of one good is produced and less of another. Consider an imaginary economy in which 20,000 citrus and 120,000 pears are produced.
Closing
In conclusion, this ECO 201 2-2 Simulation Discussion: Comparative Advantage enhances your understanding of comparative advantage and opportunity costs through interactive simulations and helps develop the ability to apply economic theories to practical business decisions. The ability to analyse and implement these concepts can lead to more strategic decision-making in real-world scenarios, leveraging economic efficiency and growth opportunities.
You can also read our ECO 201 next module 3-2 Simulation Discussion: Competitive Markets.
References
Bloomenthal, A. (2022, August 17). Production Possibility Frontier (PPF): Purpose and Use in Economics. Investopedia. https://www.investopedia.com/terms/p/productionpossibilityfrontier.asp
Fernando, J. (2022, June 27). Opportunity Cost Formula, Calculation, and What It Can Tell You. Investopedia. https://www.investopedia.com/terms/o/opportunitycost.asp
Learn Economics: The Law of Comparative Advantage – 2022. (2022, October 13). MasterClass. https://www.masterclass.com/articles/learn-economics-the-law-of-comparative-advantage
