How is trade profitable for both countries involved? Surely one loses out in the end.

Question

How is trade profitable for both countries involved? Surely one loses out in the end.

In: Economics

Answer 1

Because value is relative, not absolute.

If one country has a lot of oil but little food, food is more valuable to them and oil is less valuable to them. If they trade oil for food with a country that has the opposite situation, both countries benefit because countries have traded something less valuable for something more valuable.