ABSTRACT
TRADE between two people comes about when each has something to offer that the other wants and when they can agree on terms of exchange profitable to both of them. As a rule, there is a wide range of possible terms of exchange on which both parties to the deal would be willing to complete it; and it is the subject matter of the theory of markets to determine the exact terms on which, or the limits, within which, exchange will actually take place. To find this out is important, because the terms of the contract determine both the efficiency of economic organization and the distribution of the gain from the division of labor.
