Why Do People Trade?

Why do people trade? They expect to benefit (or gain) from it. Trade is exchange of goods and services. When one party does not see a benefit, they will stop trading. Both parties benefit from voluntary trade – one of the most important concepts in economics! Basis for idea of free trade among individuals, businesses & countries.

Reasoning for trade . . . People judge satisfaction from a trade by weighing the expected benefits against the expected costs. Different people place different marginal values on goods/services, making benefits from trade possible. Voluntary exchange can make both individuals and nations better off . . .