Ricardian Explorer

Betty J. Blecha, San Francisco State University

Summary

Ricardian Explorer, implemented on the internet, simulates a Ricardian trade model with linear production technology and a CES utility function. The typical simulation has two countries and two goods. While Ricardian explorer was developed to supplement a course in international trade, it can also be used in intermediate microeconomics and microeconomic principles courses. The authors of the simulation are Alberto Isgut and Tanya Rosenblat of Wesleyan University.

Economics | College Introductory, College Upper (15-16)

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Learning Goals

The simulation allows students to observe the workings of several significant economic concepts in the context of their own decision making in a two country - two good world. An instructor can use the simulation to show:

How relative prices influence individual decisions that cuase aggregate outcomes.
The difference between the production possibility frontier and consumption possibilities in a world of trade.
Why opportunity cost matters.
The difference between absolute advantage and comparative advantage.
What is meant by the gains from trade.
What is meant by a general equilibrium solution.
How market prices coordinate economic activity.

Context for Use

Ricardian explorer was developed to supplement a course in international trade. It can also be used in intermediate microeconomics and microeconomic principles courses. However, principles students will find the documentation beyond the skills level assumed in the beginning course.

Description and Teaching Materials

The Ricardian Explorer web site gives all the information need to use the simulation. To use Ricardian Explorer, a non-Wesleyan instructor needs to set up an account by emailing a technical support person, who's email address is given on the web site's home page. Once the account is created, the instructor can choose an existing simulation or create a new simulation. The instructor defines a game by specifying the country names, the good names, the value of each country's labor endowment, the unit labor requirements of each good in each country, and the rho value for the CES utility function, assumed to be the same for all consumers in all countries.

The following image shows the computer interface students use to do the simulation.

When preparing for the simulation, students can view an annotated example page where they can mouse over different areas and see descriptions of each item on the page.

TIME REQUIREMENTS:
Instructor preparation: Approximately two hours to set up the simulation and prepare class materials.
Class preparation: One 50 minute class period.
Class simulation: One 50 minute class period.