Gains from Trade

Additional goods and services that a nation's residents can consume, over and above the amounts that they could have produced within their own borders, due to trade with residents of other nations.

Suppose we have two countries, X and Y. Suppose country X could produce 100 computers by itself and 50 baskets of food, while country Y can produce 60 computers and 110 baskets of food. Now suppose that the residents of these two countries agree to exchange computers and food at rate of exchange of 1 basket of food per computer. Also, suppose country X want to trade 100 computer to country Y for food. Then for 100 computers country X would gain 100 baskets of food and country Y would gain 100 computers. So both countries get to consume more of each good than they would have they had not traded.