what is the relationship between trade and world output?

Answer 1

World output is the total amount of goods produced by all the individual countries of the world. So if each country produces one banana and one soda, then multiply that by the entire world to get world output. Trade allows countries to engage in specialization. Thus, one country that is more proficient in growing bananas could forgo making the soda and increase their harvest to five bananas, and trade some of these excess bananas to a country that is better at making sodas. Thus, total output has increased since each country is able to use its resources more effectively through trade.

This is one of many arguments in support of free trade.