When people trade, what is one outcome that can occur?

When people engage in trade, one significant outcome is that producers can achieve a higher level of consumption or production outside their original production possibilities. This occurs because trade allows individuals or countries to specialize in the production of goods and services in which they have a comparative advantage. By focusing on what they produce best and exchanging those goods with others, they can access a greater variety of products, increasing overall efficiency and welfare.

This enhanced outcome stems from the ability to leverage resources and capabilities more effectively. For instance, if one producer is far better at making cars while another is more efficient at growing wheat, they can trade these goods. Through this specialization and trade, both producers can enjoy more than if they tried to produce both goods independently. As a result, trade empowers producers to operate beyond their initial production constraints, benefiting from an expanded choice and potentially enhanced living standards.