Final answer:
Foreign trade allows a country to access wider varieties of products at a reduced cost than domestic production alone. It is founded on comparative advantage, expanding the range of goods a country can consume. Despite potential job displacement in some sectors, trade is generally beneficial for economies.
Step-by-step explanation:
Foreign trade is essential because it increases the availability of goods and services. Comparative advantage is the principle that suggests a nation should produce and export goods for which it is relatively more productive than other countries, and import goods that other nations can produce more efficiently. This concept allows countries to enjoy a combination of goods and services beyond their own production capabilities, essentially expanding their production possibilities curve. International trade also helps in raising incomes, which can lead to improved working conditions over time.
However, it can bring challenges, such as competition that may undercut domestic businesses, and can lead to job losses within certain sectors. Nonetheless, this trade-off is generally considered to be worthwhile, as the overall benefits to the economy—such as lower prices for consumers and increased efficiency—tend to outweigh these costs. International agreements further help mitigate protectionist pressures and encourage the flow of trade.