Gains from trade

Gains from trade happen when two people or groups of people decide to trade things they have with each other. For example, if I have a piece of candy and you have a pencil, we can make a trade. Trading allows me to get the pencil—something that I didn't have before, and you to get the candy—something that you didn't have before. In this way, both of us have gained something valuable that we didn't have before! This is why it's called gains from trade.