2-2 simulation discussion PDF

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Hello classmates, When considering opportunity costs and comparative advantages when making business decisions I think it is important to look for a trade partner with a higher comparative advantage for the item I want to trade for and a higher opportunity cost for the item I wish to trade. As stated in this week’s reading opportunity cost is “what we give up to get that item” (Mankiw, 2021). That means it cost me some of one item to make another. The text defines comparative advantage as “producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X and is said to have a comparative advantage in producing it” (Mankiw, 2021). With that in mind if my company has a comparative advantage for product X while another has a comparative advantage in product Y, it should benefit both companies to trade X for Y, allowing both to end up with more product. It might be a little difficult to convince another person to modify their production, but once you can show that in the long run you both can end up with more useable products with trade the benefit should become apparent. Now when it comes to the simulation games…. I found them frustrating, especially the limited directions and short time limit. I was unable to finalize a trade in the second simulation which resulted in no data. The first simulation, I changed the number of burgers and fries around and ended up with a less than ideal combination. I found it strange that the simulation would automatically start with the optimum combo, all I really needed to do with that one was submit what was already there. Here are my screenshots for reference.

Mankiw, N.G. (2021). Principles of economics. (9th edition). Cengage...