Trade and Gains from Trade on Gilligan's Island

Production Possibilities Table

Shows combinations of goods produced with resources.

Production Possibilities Frontier

Graphical representation of production combinations.

Opportunity Cost

Next best alternative sacrificed for a choice.

Scarcity

Limited resources versus unlimited wants.

Productive Efficiency

Producing maximum output with given resources.

Growth/Technology Change

Improvements in production capabilities over time.

Absolute Advantage

Ability to produce more using fewer resources.

Comparative Advantage

Lower opportunity cost in producing a good.

Specialization

Division of labor to increase production efficiency.

Terms of Trade

Conditions under which trade occurs between parties.

Production Possibilities

Maximum output combinations of two goods.

Inverse Relationship

More of one good means less of another.

Current Production

Output levels without trade adjustments.

Trade Benefits

Increased consumption through exchange of goods.

Huts Production

Maximum of 60 huts produced monthly.

Radios Production

Maximum of 20 radios produced monthly.

Opportunity Cost of Huts

60 huts equal 20 radios produced.

Opportunity Cost of Radios

20 radios equal 60 huts produced.

Production Efficiency

All resources utilized without waste.

Consumption After Trade

Increased goods availability post-exchange.

Ricardo's Theory

Free trade benefits all, even inefficient producers.

Production Combinations

Different outputs achievable with available resources.

Trade Agreement

Mutual decision on goods exchanged.

Resource Allocation

Distribution of resources for production efficiency.

Production Curve

Graphical depiction of maximum production limits.

Economic Efficiency

Optimal use of resources for maximum output.

Island Economy

Economic system based on limited resources.

Production Capacity

Maximum output achievable with current resources.