public and other goods; international trade

According to the ______ theory, a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that country.

Heckscher-Ohlin

China is relatively labor-abundant compared with European Union member nations. Therefore, China has a comparative advantage in _____ compared with European Union member nations.

goods that are labor-intensive in production

Because of large up-front R&D (research and development) costs, pharmaceutical companies typically face high fixed costs when developing new drugs. The marginal cost of producing a drug after development is very low, often close to zero. When these companies set their price and output to maximize profit, patients pay a _____ price for a _____ quantity of the drug than is socially optimal.

higher;smaller

According to the theory of comparative advantage, a country should

specialize and export goods with the lowest opportunity cost.

Public goods should be produced up to the point at which the marginal cost of production equals:

the sum of the individual marginal benefits enjoyed by all consumers of that unit.