Final answer:
Comparative Advantage is the concept explaining the improvement in outcomes when specialized producers exchange goods and services, allowing countries to benefit from lower opportunity costs and gain from trade.
Step-by-step explanation:
The improvement in outcomes that occurs when specialized producers exchange goods and services is called Comparative Advantage. This concept is central to international trade and was famously described by the economist David Ricardo. The idea behind comparative advantage is that even if a country has an absolute advantage in producing all goods, it can still benefit from trade by specializing in goods that it produces with the lowest opportunity cost. By doing so, each country can engage in trade and gain from trade because they can consume more than they could produce independently.
Specialization and trade lead to an increase in total world production, as countries focus on producing goods where they have a comparative advantage. This can be clearly seen when countries engage in intra-industry trade, where they can split up the value chain, producing different stages of a good in different geographic locations, maximizing efficiency, and expanding the gains from trade even further.