The standard modern theory of trade is based on increasing marginal costs of producing more of a product, so that the production-possibility curve is bowed out. We can combine bowed-out production-possibility curves with community indifference curves to show how countries are affected by opening to trade. Trade is positive-sum activity. The whole world gains from trade, and each country is at least as well off with free trade as with no trade. The gains from trade for each country can be demonstrated in two ways. First, trade allows the country to consume beyond its own ability to produce—it allows consumption outside of its production-possibility curve. Second, trade allows the country to reach a higher community indifference curve, indicating that the country reaches a higher level of national economic well-being. The analysis provides key insights into the basis for the pattern of international trade (what is exported and what is imported) by each country. While trade can be driven by differences in demand, most of our attention is on production-side differences. Production-side differences cause the countries' production-possibility curves to skew in different ways, reflecting different comparative advantages. One source of production side differences is differences in technologies or factor productivities. The Heckscher-Ohlin (H-O) theory focuses on another important source of production-side differences. International differences in the shapes of bowed-out ppc's can occur because (1) different products use the factors of production in different proportions, and (2) countries differ in their relative factor endowments. The H-O theory of trade patterns predicts that a country exports products that are produced with more intensive use of the country's relatively abundant factors, in exchange for imports of products that use the country's relatively scarce factors more intensively.