In other words, a country pays for its imports with its exports. Distribute a copy of Activity 3 to each student. Ask students to add notes to the vocabulary list as the lesson continues. Explain that in both fables, voluntary exchange took place. Voluntary exchange occurs when people or organizations trade something of value with other people or organizations in order to benefit.
People agree to trade because they expect to benefit.
Ask the students for examples of times they engage in voluntary exchange. Explain that because both sides in a trade expect to benefit, the benefits that result from the trade can be counted as gains from trade. For example, farmers may sell their harvest and use the money they receive to buy clothing, food, entertainment, and so on. They benefit more from the items they purchase than they do from keeping the bushels of grain for themselves. These gains would not have been realized if trade had not occurred.