<P> Theory and observation set out the conditions such that market prices of outputs and productive inputs select an allocation of factor inputs by comparative advantage , so that ( relatively ) low - cost inputs go to producing low - cost outputs . In the process , aggregate output may increase as a by - product or by design . Such specialization of production creates opportunities for gains from trade whereby resource owners benefit from trade in the sale of one type of output for other , more highly valued goods . A measure of gains from trade is the increased income levels that trade may facilitate . </P>
<P> Theory and observation set out the conditions such that market prices of outputs and productive inputs select an allocation of factor inputs by comparative advantage , so that ( relatively ) low - cost inputs go to producing low - cost outputs . In the process , aggregate output may increase as a by - product or by design . Such specialization of production creates opportunities for gains from trade whereby resource owners benefit from trade in the sale of one type of output for other , more highly valued goods . A measure of gains from trade is the increased income levels that trade may facilitate . </P>
one of the major themes in economics is that trade created
one of the major themes in economics is that trade created
increased income levels
increased income levels