Cambridge IGCSE Economics 0455 — 2007 May/June Paper 3 · Variant 1

1 $2 bn is invested in developing a country’s natural resources and infrastructure. Which two factors of production does this refer to directly? A capital and labour B capital and land C enterprise and land D labour and land 2 What makes specialisation easier? A the imposition of taxation B the protection of trade C the system of barter D the use of money 3 A free market economy is more likely than a planned economy to encourage development because A equality of income is encouraged. B factors of production would be employed efficiently. C government intervention uses taxes and subsidies. D social costs are taken into consideration. 4 An economy is producing at X. X 200 food Y 150 0 75 100 machines What is the opportunity cost of choosing to produce at Y instead of X? A 25 machines B 50 units of food C 75 machines D 150 units of food 5 Each country of Southern Africa has a mixed economy. Which statement about a mixed economy is correct? A The government employs most primary sector workers. B The government owns all major secondary sector industries. C The government owns the transport network. D The government provides public and merit goods. 6 When will a trade union be most effective in pursuing its members' interests? A The economy is in recession with rising unemployment. B The employers have few orders for the product. C The government passes a law to increase competition in the labour market. D The members' wages make up a small part of total costs. 7 The table gives information about four business organisations. Which organisation is most likely to be described as a co-operative? owners have owned by its limited liability members A no yes B no no C yes yes D yes no 8 What is the function of a stock exchange? A It enables shareholders to sell their shares. B It fixes fair prices for shares. C It promises to buy unsold shares. D It sets the number of shares. 9 A French company employs French people, is located only in France, sells shares on the stock exchange but uses other firms to transport its products to other countries. What type of company is this? A a co-operative B a private company C a public company D a multi-national 10 A demand curve for a product shows the relationship between its price and A cost of production. B population changes. C the income of the consumer. D the quantity of the product consumed.

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