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Saudi Arabia has a tremendous comparative advantage in petroleum.Which factor is a source of this comparative advantage?
A) mild temperatures
B) large reserves of crude oil
C) no opportunity cost associated with oil production
D) high tariffs on oil from other nations
Comparative Advantage
The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than competitors.
Petroleum
A naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons and other organic compounds, used primarily as fuel and in the production of various chemicals.
Crude Oil
A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials, used as a fuel and raw material in chemical industries.
- Identify sources of comparative advantage in international trade.
- Understand the role of factor endowments in determining comparative advantage.
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Learning Objectives
- Identify sources of comparative advantage in international trade.
- Understand the role of factor endowments in determining comparative advantage.
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