Final answer:
Total output increases when countries specialize in producing goods for which they have a comparative advantage and trade with other countries, as this leads to greater efficiency and higher global production.
Step-by-step explanation:
If each country produced their specialty—agricultural products and manufactured goods—and traded, there would be more total output than if each country produced all of their own agricultural and manufacturing needs. This conclusion is based on the economic principle of comparative advantage, which suggests that when countries specialize in producing goods that they can produce more efficiently (at lower opportunity cost), and then trade these goods, total production in the global economy increases.
Specialization and trade enable countries to focus on their strengths while benefiting from the strengths of other countries. This concept, established by economist David Ricardo, highlights that even if one country has an absolute advantage in producing all goods, there can still be gains from trade. This is because trade allows for an increase in overall efficiency and can lead to an increase in global production and consumption possibilities.
Therefore, under the scenario of specialization, the country better at producing agricultural products would generate more of those goods, and the country better at producing manufactured goods would produce more of those. When these countries trade, they both can consume more of both types of goods than if they tried to produce everything themselves, resulting in higher total output.