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

Trade only occurs when both parties require one thing and have excess of another. For example if a farmer and a blacksmith live in a village, the farmer would trade wheat to the blacksmith for a sickle or something. Both parties profit. But when it comes to countries it is usually because of a lack of resources.