Cambridge IGCSE Economics 0455 — 2008 May/June Paper 1 · Variant 1
0455/11/M/J/08 · 40 questions · 40 marks · ≈45 min
The question paper and its mark scheme, free to read here and free to download. This is Cambridge’s own paper, exactly as it was sat.
Question paper12 pages
Mark scheme2 pages
Answers below. Sit the paper first if you are practising.
Questions as text
Q1 · What can happen in a planned economy that does not happen in a market economy?
1 What can happen in a planned economy that does not happen in a market economy? A The allocation of resources can take account of the total effects on society. B There can be full employment of factors of production. C There can be inflation. D There can be international trade.
Mark scheme: A
Q2 · Which of the following is a factor of production?
2 Which of the following is a factor of production? A the payment of interest on a bank loan B the profit declared by a company in its annual report C the skill of the managers of a business D the taxes paid to the government
Mark scheme: C
Q3 · In a mixed economy, resources are used as a result of A the decisions of consumers only
3 In a mixed economy, resources are used as a result of A the decisions of consumers only. B the decisions of firms only. C the decisions of consumers and firms. D the decisions of consumers, firms and government.
Mark scheme: D
Q4 · A farmer decides to use a more fertile field
4 A farmer decides to use a more fertile field. As a result he is able to produce the same output as before but with fewer workers and less equipment. This is a substitution in which A capital replaces labour and land. B labour replaces capital and land. C land replaces capital and enterprise. D land replaces capital and labour.
Mark scheme: D
Q5 · The table shows the various combinations of food and clothing which a village can produce…
5 The table shows the various combinations of food and clothing which a village can produce using all its resources. food units clothing units 0 500 100 400 200 250 300 50 400 0 What is the opportunity cost to the village of increasing the production of food from 200 to 300 units? A 50 units of clothing B 100 units of clothing C 200 units of clothing D 250 units of clothing
Mark scheme: C
Q6 · The diagrams show the percentage (%) of output by type of business in four countries, A…
6 The diagrams show the percentage (%) of output by type of business in four countries, A, B, C, D. Which country has the largest percentage of output in the private sector? A B C D 60 % 50 % 40 % 40 % 40 % 30 % 30 % 30 % 20 % 20 % 20 % 20 % sole traders and partnerships private and public companies public corporations
Mark scheme: D
Q7 · Which of the following benefits does a stock exchange provide?
7 Which of the following benefits does a stock exchange provide? A a source of finance for private limited companies B a safeguard against the risk of loss C an opportunity to sell shares quickly D an opportunity to purchase foreign currency
Mark scheme: C
Q8 · What is not a function of a trade union?
8 What is not a function of a trade union? A to act as a pressure group to change labour laws B to negotiate with employers over conditions of work C to promote the sales of products made by its members D to protect the living standards of its members
Mark scheme: C
Q9 · A company is described as a multinational if it A employs workers of several nationalities
9 A company is described as a multinational if it A employs workers of several nationalities. B exports goods to several countries. C has production units in several countries. D has shareholders from several countries.
Mark scheme: C
Q10 · Due to good weather, there is a surplus in the market for an agricultural product
10 Due to good weather, there is a surplus in the market for an agricultural product. Which change would cause the market to return to equilibrium? A a decrease in demand B a fall in price C an increase in supply D a rise in price
Mark scheme: B
Q11 · Which pair is an example of products in complementary (joint) demand?
11 Which pair is an example of products in complementary (joint) demand? A bananas and oranges B cars and petrol C tea and coffee D wheat and straw
Mark scheme: B
Q12 · What combination of events might cause a rise in the willingness and the ability of…
12 What combination of events might cause a rise in the willingness and the ability of consumers to buy a product? price of a substitute tax rates product A decrease decrease B decrease increase C increase increase D increase decrease
Mark scheme: D
Q13 · Which diagram best represents the market for tickets for a world famous tennis tournament?
13 Which diagram best represents the market for tickets for a world famous tennis tournament? A B S S price price D D O quantity O quantity C D S price price S D D O quantity O quantity
Mark scheme: C
More questions on The role of markets in allocating resources
Q14 · What is a firm’s aim when it advertises its product?
14 What is a firm’s aim when it advertises its product? A to shift its demand curve to the left B to shift its supply curve to the left C to shift its demand curve to the right D to shift its supply curve to the right
Mark scheme: C
Q15 · What would an individual be doing to be described as a worker in the secondary sector?
15 What would an individual be doing to be described as a worker in the secondary sector? A working in a firm that grows fruit trees and plants B working in a firm that produces machines for other firms C working in a government passport office D working in the reception area of a hospital
Mark scheme: B
Q16 · A supermarket wishes to recruit a qualified manager for a senior position to control the…
16 A supermarket wishes to recruit a qualified manager for a senior position to control the stocks of goods. Some work will be required at night as the supermarket is open 24 hours. A good salary is being offered. Which applicant would be most likely to be suitable for the position? A a person currently employed as a supervisor in another supermarket B a person who has experience of managing a small newsagents C a person who has to travel a long way and has demanding family commitments D a person who has recently graduated in Economics
Mark scheme: A
Q17 · What is the most likely reason for a firm to offer higher wages to recruit more staff?
17 What is the most likely reason for a firm to offer higher wages to recruit more staff? A falling incomes B falling output C falling prices D falling unemployment
Mark scheme: D
Q18 · What is likely to be found when comparing high income earners with low income earners?
18 What is likely to be found when comparing high income earners with low income earners? A High income earners pay a lower proportion of their income in direct tax. B High income earners spend a lower proportion of their income on food. C High income earners spend a lower proportion of their income on foreign travel. D High income earners save a lower proportion of their income.
Mark scheme: B
Q19 · What would encourage a rise in spending but not a rise in saving?
19 What would encourage a rise in spending but not a rise in saving? A easier credit facilities B more people working C rising interest rates D rising standards of living
Mark scheme: A
Q20 · An Economics student made the following statements about costs of production
20 An Economics student made the following statements about costs of production. Average costs remain the same at all levels of output. Fixed costs can exist when there is no output. Total costs can include both fixed and variable costs. Total variable costs fall as output increases. How many of these statements are correct? A 1 B 2 C 3 D 4
Mark scheme: B
Q21 · Which statement explains why cars are often repaired by small garages?
21 Which statement explains why cars are often repaired by small garages? A bulk buying of spare parts can take place B car-repair jobs are varied C entry to the car-repair industry is restricted D expensive machinery is required
Mark scheme: B
Q22 · A Japanese company which has spare capacity has agreed to refine 20 000 barrels of oil a…
22 A Japanese company which has spare capacity has agreed to refine 20 000 barrels of oil a day for a Chinese company. What is likely to happen in the Japanese firm to fixed cost, to variable cost and to total cost? fixed cost variable cost total cost A rise rise rise B rise fall stay the same C stay the same rise rise D stay the same fall fall
Mark scheme: C
Q23 · The table shows a firm’s total revenue and total cost
23 The table shows a firm’s total revenue and total cost. output (units) total revenue ($) total cost ($) 10 20 14 20 25 17 30 30 21 40 35 27 What level of output gives maximum profit? A 10 units B 20 units C 30 units D 40 units
Mark scheme: C
Q24 · As output increases, what happens to the average fixed cost of production?
24 As output increases, what happens to the average fixed cost of production? A It falls continuously. B It falls and then rises. C It remains constant. D It rises and then falls.
Mark scheme: A
Q25 · ‘The pound sterling made a dramatic recovery in the world's currency markets yesterday.’…
25 ‘The pound sterling made a dramatic recovery in the world's currency markets yesterday.’ To what does this statement refer? A exchange rate B growth rate C interest rate D tax rate
Mark scheme: A
Q26 · To pay for local projects the government imposes a charge of $500 on each adult with a…
26 To pay for local projects the government imposes a charge of $500 on each adult with a 100 % increase for those on higher incomes. Which diagram illustrates this? A B C D tax tax tax tax tax tax tax tax $ $ $ $ 0 income 0 income 0 income 0 income $ $ $ $
Mark scheme: C
Q27 · What might a government increase if it wished to raise the growth rate of an economy?
27 What might a government increase if it wished to raise the growth rate of an economy? A expenditure on road building B goods and services tax (value added tax) C the rate of income tax D the rate of interest
Mark scheme: A
Q28 · What is meant by a regressive indirect tax?
28 What is meant by a regressive indirect tax? A a tax on income that falls more heavily on the poor B a tax on income that falls more heavily on the rich C a tax on spending that falls more heavily on the poor D a tax on spending that falls more heavily on the rich
Mark scheme: C
Q29 · What is likely to be an advantage of economic growth?
29 What is likely to be an advantage of economic growth? A The country’s resources will be depleted. B The price level will increase. C The rate of employment will fall. D The standard of living will increase.
Mark scheme: D
Q30 · A government decreased the tax on all goods produced in a country
30 A government decreased the tax on all goods produced in a country. What is the most likely result of this? A a decrease in imports B a decrease in industrial production C a decrease in real incomes D a deterioration in the balance of trade in goods
Mark scheme: A
Q31 · In 2003, interest rates in Southern Africa were reduced
31 In 2003, interest rates in Southern Africa were reduced. What might have happened as a result? A an increase in investment B an increase in unemployment C a reduction in economic growth D a reduction in government spending
Mark scheme: A
Q32 · The table gives information on Gross Domestic Product (GDP) growth rates, inflation and…
32 The table gives information on Gross Domestic Product (GDP) growth rates, inflation and the unemployment rates for a number of countries in 2006. country GDP growth inflation unemployment % % rate % Brazil 3.5 4.0 10.4 China 11.3 1.5 4.2 France 1.5 1.9 9.0 India 9.3 7.9 7.3 UK 2.6 2.5 3.0 What can be concluded from the table about 2006? A Any particular product would cost most in India. B Economic growth was highest when unemployment was lowest. C Low inflation always causes low unemployment. D On average, the Chinese people were likely to have had an increase in real income.
Mark scheme: D
Q33 · Which of the following is most likely to be used as a measure of living standards?
33 Which of the following is most likely to be used as a measure of living standards? A the balance of trade B the consumer price index C the government’s budget position D the real GDP per head
Mark scheme: D
Q34 · In some developing countries, such as Rwanda, a large percentage of the population is…
34 In some developing countries, such as Rwanda, a large percentage of the population is involved in subsistence farming. What can be concluded from this? A In some developing countries, the natural resources are used efficiently. B Production in some developing countries depends upon skilled labour. C Production in some developing countries is not likely to be capital intensive. D Some developing countries do not import food because each family is self-sufficient.
Mark scheme: C
More questions on Differences in economic development between countries
Q35 · What is characteristic of a developed economy?
35 What is characteristic of a developed economy? A a high infant mortality rate B a high literacy rate C a low GDP per capita D a low life expectancy
Mark scheme: B
More questions on Differences in economic development between countries
Q36 · In 2001 a government enquiry approved a major new air terminal for London, which would…
36 In 2001 a government enquiry approved a major new air terminal for London, which would create many new jobs. However, it would also cause extra noise and air pollution. Compensation would have to be paid to some people whose houses would be demolished. What is not involved in this exploitation of resources? A conflicts of interest B free market economy C income creation D opportunity cost
Mark scheme: B
Q37 · Some countries protect their economies through barriers to free trade
37 Some countries protect their economies through barriers to free trade. What would be the result in such countries of this protection? A Competition will be reduced. B Consumer choice will increase. C Prices will fall. D Unemployment will rise.
Mark scheme: A
Q38 · What is an advantage if a region specialises in a narrow range of products?
38 What is an advantage if a region specialises in a narrow range of products? A Other regions will become over-dependent on the region. B Scarce resources are used more efficiently. C The level of production in the region will decrease. D The region’s system of transport is improved.
Mark scheme: B
Q39 · What is the main reason why the government, rather than the private sector, builds and…
39 What is the main reason why the government, rather than the private sector, builds and runs hospitals? A Hospitals are expensive to build. B The government has enough tax revenue to pay for hospitals. C The government needs to be sure that the doctors are well-trained. D The whole country can benefit from the provision of good health facilities.
Mark scheme: D
Q40 · In an African country, large amounts of land were taken from farmers to make a national…
40 In an African country, large amounts of land were taken from farmers to make a national park to protect rare animals and provide a tourist attraction with accommodation. Which of the following is likely to decrease as a result of these changes? A earnings from foreign visitors B employment in the primary sector C employment in the tertiary sector D the price of land elsewhere
Mark scheme: B
What was in this paper
The subtopics covered by these 40 questions, and how many questions each got. Open one in a new tab to see every Cambridge question on it.
4Fiscal policy4Demand3Market failure3Workers3Differences in economic development between countries2Economic growth2Foreign exchange rates2Households2Mixed economic system2The factors of production2Firms1Globalisation, free trade and protection1International specialisation1Living standards1Market structure1Monetary policy1Money and banking1Opportunity cost1Price determination1The role of markets in allocating resources1Trade unions1What you needed in this session
Cambridge’s own grade thresholds for 2008 May/June, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.