Final answer:
According to the principle of comparative advantage, when countries specialize in producing goods for which they have a relative efficiency and engage in trade, total output is increased.
Step-by-step explanation:
When countries engage in specialization and trade according to their comparative advantage, total output increases. This principle was famously set forth by David Ricardo, who argued that even if a country could produce all goods with high productivity, it could still gain from trading with others. Essentially, by focusing on producing the goods that they can make more efficiently (in terms of opportunity cost) compared to other goods, countries can increase overall production.
Comparative advantage allows nations to specialize in producing the goods for which they have a relative efficiency, while trade enables them to exchange these goods with each other. This specialization and trade result in a greater quantity of goods being available than if each country attempted to produce everything on its own. Tables comparing production levels before and after specialization, like those referenced in the discussion, clearly show increased total world production after specialization—exemplifying the gains from trade Ricardo described.
Even in scenarios where one country has an absolute advantage in producing all goods, trade can still be beneficial. The high-income country with absolute advantage can still benefit from trade due to comparative advantage, meaning it gives up less to produce one good over another. Other countries gain by accessing goods they couldn't produce as efficiently, while the more productive country can enjoy the fruits of lower opportunity costs from its trading partners.