When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy increases and overall gains from trade become possible.

Direct exam-style completion

The usual multiple-choice statement is:

“When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy …”

The correct completion is:

“… rises, making it possible for everyone to be better off through trade.”

Economics textbooks describe that when individuals or countries specialize according to comparative advantage, the combined output of all goods is higher than if each tried to produce everything for themselves. This larger “total pie” is what allows both sides to trade and end up consuming more than they could in isolation.

Quick intuition (mini story)

Imagine two people: one is relatively better at baking bread, the other relatively better at making clothing, even if one of them is absolutely faster at both tasks. If each tries to “do everything,” they spread their time inefficiently and total bread and clothing are limited. When each focuses on what they are relatively best at and then trades, the total bread and total clothing produced go up, and both can end up with more of both goods than before.

Why total production increases

  • Comparative advantage is about lower opportunity cost , not just being faster in absolute terms.
  • By specializing where opportunity cost is lowest, resources are allocated more efficiently across people or countries.
  • This efficient allocation pushes production to a higher point on (or even beyond, with trade) the joint production possibilities frontier, meaning more total output of at least one good and not less of the other overall.

So, in textbook language: specialization according to comparative advantage raises total production in the economy and allows gains from trade for all participants.

TL;DR:
When each person specializes in the good where they have a comparative advantage, total production in the economy increases, which is what makes mutual gains from trade possible.

Information gathered from public forums or data available on the internet and portrayed here.