Cambridge IGCSE Economics 0455 — 2005 May/June Paper 3 · Variant 1

1 In a market economy, what does the entrepreneur decide? A the combination of resources used B the demand for the product C the equilibrium price of the product D the level of profits 2 China is changing from a centrally planned economy towards a market economy. How will the influence of consumers and the government change? consumers government A decrease decrease B decrease increase C increase decrease D increase increase 3 A factory working at full capacity is producing tennis racquets and golf clubs. The management decides to produce fewer racquets and more clubs because of an increase in demand for golf clubs. What is the opportunity cost of producing more golf clubs? A the cost of retraining some workers to make golf clubs B the cost of transporting and selling the extra golf clubs produced C the materials bought to make extra golf clubs D the tennis racquets that will not now be produced 4 Anything used as money must have A a fixed supply. B general acceptability. C recognition as legal tender. D value in itself. 5 A business has two owners. They have limited liability. Its shares are not sold on the stock exchange. What type of business is this? A partnership B private limited company C public corporation D public limited company 6 What is most likely to be the main function of a central bank? A controlling the money supply B investing in commerce and industry C issuing and processing credit cards D making loans to individuals 7 What would prevent an Egyptian company being classified as a multi-national company? A It concentrates on one stage of production only. B It employs only Egyptians as managers. C It manufactures only in Egypt. D It uses other firms to transport its goods. 8 What would not cause a shift in the demand curve for a good? A a change in incomes B a change in the price of a substitute good C a change in the price of the good D a change in the tastes of consumers 9 Four changes affecting the supply of a good are listed below. What would cause the supply curve to shift to the right? A an improvement in technology B an increase in its market price C a reduction in labour productivity D the introduction of a sales tax 10 What is an example of complementary demand? A buses and bus fares B cotton and cotton seed C televisions and electricity D wood and sawdust 11 A good is successfully advertised. What is the most likely impact on the demand and supply curves for the good? demand curve supply curve A shift to left shift to left B shift to left shift to right C shift to right shift to left D shift to right shift to right 12 The diagram shows the supply and demand curves for a good. The market is in equilibrium at point X. supply R S X price P T Q demand O quantity What is the excess demand at price P? A PT B QR C QT D ST

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