Under what circumstances would world output be maximized?

Question

Quizplus · Accepted Answer

World output would be maximized if each country specializes in producing those goods in which it has a comparative advantage. This means that each country focuses on producing the goods that it can produce at a lower opportunity cost, which results in greater efficiency and higher total output for the world. By specializing in this way, countries can trade with each other and benefit from the gains from trade, which further increases world output. Option A would limit the potential gains from trade, while option C assumes that every country has an absolute advantage in something, which is unlikely. Option D reduces consumption possibilities, which would lead to lower output.

Under What Circumstances Would World Output Be Maximized