Cambridge IGCSE Economics 0455 — 2008 May/June Paper 3 · Variant 1

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. 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 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. 4 Hong Kong lacks natural resources. Its best asset is its people. What can be concluded about Hong Kong’s factors of production? well supplied poorly supplied A capital enterprise B enterprise labour C labour land D land capital 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 6 An Italian-owned tour operator needs its staff in Rome to be able to speak a number of languages so it employs people from different countries. It also uses other firms in different countries to provide tour guides and coach drivers. It is part of an organisation that has shares issued on the stock exchange. Which type of company is this? A a co-operative B a private company C a public company D a multi-national 7 A commercial bank is appointed to act as a country’s central bank. What new function would it now have? A controlling monetary policy B dealing in foreign exchange C ensuring security for loans D holding liquid assets 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 9 What is always true about multi-national companies? A They employ more workers abroad than in their home market. B They operate in manufacturing industry. C They originate from developed countries. D They own production facilities abroad. 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

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