Trade creates value

Why do individuals trade with each other, and what is the significance of this exchange? We have learned that value is subjective. It is wrong to assume that a particular good or service has a fixed objective value just because it exist^.^ The value of goods and services generally depends on who uses them, and on circumstances, such as when and where they are used, as well as on the physical characteristics. Some people love onions, whereas others dislike them exceedingly. Thus, when we speak of the “value of an onion,” this makes sense only within the context of its value to a specific person. Similarly, to most people an umbrella is more valuable on a rainy day than on a sunny one.
Consider the case of Janet, who loves tomatoes but hates onions, and Brad, who loves onions but hates tomatoes. They go out to dinner together and the waiter brings their salads. Brad turns to Janet and says, “I’ll trade you the tomatoes on my salad for the onions on yours.” Janet gladly agrees to the exchange. This simple example will help us illustrate two important aspects of voluntary exchange.