International trade theory is based on the principle of comparative advantage which is in turn based on the concept of opportunity cost. When two countries produce two different goods the one with the comparative advantage is the one that with a given amount of resources produces the good with the lowest opportunity cost. For example if country x produces 10 computers and 1 car its opportunity cost of producing a computer is 1/10th of a car. On the other hand if country y produces 10 computers and 5 cars its opportunity cost of producing 1 computer is 1/2 of a car thus as seen more clearly in the table below the country with comparative advantage in computer production is country x.
| Cars | Computers | |
| Country X | 1 | 10 |
| Country Y | 5 | 10 |
The most important benefit from trade is that now countries can consume at a point outside their production possibility frontier. The assumptions of the diagram below are that we only have two goods, that are resources are given, that technology is kept constant and that there is availability of all factors of production
Without trade countries wouldn't be able to consume at these points due to the fact that the only have a limited amount of resources that act as a constraint to achieving such points of production and consequently consumption if we are operating in a closed economy. This is a benefit which unfortunately most countries ignore nowadays due to increasingly mercantilist beliefs and thus impose means of protectionism in order to protect domestic inefficient producers. However they ignore that through imports and specialisation we achieve optimal allocation of resources and consumers gain access to a greater variety of products which would be unobtainable without trade due to the limiting nature of the production possibility frontier.
Another very important benefit that might occur is the achievement of economies of scale due to an increase in output which may lead to the achievement of a minimum efficient scale of production as seen in the following figure.
Country x has a long run average cost curve which is illustrated in the above figure. Before trade it was producing at a point higher than MES which has a higher cost of production per unit than MES because there wasn't enough demand for the firm to produce the quantity that would correspond to the lower costs at MES. After trade country x has to increase its production to be able to export goods and thus through this increase in demand arising from the sale of the product in a larger market the firm can increase production to point MES achieving economies of scale.