Saudi Arabia has a tremendous comparative advantage in petroleum. Which of the following is a source of this comparative advantage?

Question

Quizplus · Accepted Answer

Saudi Arabia has a comparative advantage in petroleum because it has large reserves of crude oil. This means that it can produce oil at a lower cost than other countries, and therefore has a competitive advantage in the global oil market. Mild temperatures (A) do not provide any direct advantage for oil production, while no opportunity cost associated with oil production (C) is not true as there are other potential uses for resources used in oil production. High tariffs on oil from other nations (D) can be a protective measure for domestic producers, but it is not a source of comparative advantage.

Saudi Arabia Has a Tremendous Comparative Advantage in Petroleum