Economics · May / June 2020 · Paper 12 · Question 8

Saudi Arabia specialises in oil extraction and refining. This is a capital-intensive industry with highly skilled labour. What might be a disadvantage of this specialisation?

1. AOil companies have increased training costs as each worker needs many different skills.
2. BOil companies may find it difficult to achieve economies of scale.
3. CResource allocation is not efficient because a narrow range of goods is being produced.
4. DWorkers may face a restricted range of job opportunities.

As printed in the paper