What matters most in determining the efficient distribution of production over the world is:

• A. The level of government intervention
• B. The size of a country's population
• C. Absolute advantage in production
• D. Comparative advantage among countries

Answer: (D)

Verified step by step guidance

1. Understand the concept of 'efficient distribution of production' as the allocation of resources and production activities across countries to maximize overall global welfare.
2. Recall the difference between absolute advantage and comparative advantage: Absolute advantage refers to the ability of a country to produce more of a good with the same resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost.
3. Recognize that the principle of comparative advantage explains why countries benefit from specializing in the production of goods for which they have the lowest opportunity cost, even if one country has an absolute advantage in all goods.
4. Analyze how government intervention and population size might influence production but do not fundamentally determine the efficient global distribution of production compared to comparative advantage.
5. Conclude that comparative advantage is the key determinant for efficient production distribution because it leads to gains from trade and specialization, maximizing total output and welfare.