Gains from Trade and the Significance of Borders

By dividing household tasks based on efficiency, known as gains from trade, individuals can optimize their productivity. Introducing a border does not eliminate gains from trade; it merely introduces the concept of exports and imports between 'countries'. In a world of free trade, borders are inconsequential, but in reality, countries enforce different rules including tariffs, taxes on imports which are often misunderstood as burdens placed only on foreign nations.