Cambridge IGCSE Economics 0455 — 2010 May/June Paper 1 · Variant 2
0455/12/M/J/10 · 30 questions · 30 marks · ≈34 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 · Which statement about the factors of production is correct?
1 Which statement about the factors of production is correct? A A river from which a company draws water is called land. B Raising finance for a company is called capital. C Supervisors employed in a company are called enterprise. D The owner of a company is called labour.
Mark scheme: A
Q2 · Which terms summarise the nature of the economic problem?
2 Which terms summarise the nature of the economic problem? A finite resources and limited wants B finite resources and unlimited wants C infinite resources and limited wants D infinite resources and unlimited wants
Mark scheme: B
Q3 · The government of a country with a rapidly increasing population decides to switch…
3 The government of a country with a rapidly increasing population decides to switch resources from investment to increased subsidies to farmers. What is the opportunity cost of this decision? A the profit earned by farmers B the rent of the land on which food is grown C the reduction in investment D the wages of the farm workers
Mark scheme: C
Q4 · Which economic change would increase the problem of scarcity?
4 Which economic change would increase the problem of scarcity? A a decrease in fish stocks B a discovery of a new oil field C an increase in labour productivity D a reduction in waste
Mark scheme: A
Q5 · What is a function of a commercial bank?
5 What is a function of a commercial bank? A acting as the lender of last resort B deciding what is a legal tender C determining monetary policy D providing overdrafts
Mark scheme: D
Q6 · The diagram shows the market for fresh fish in the Caribbean with equilibrium point X
6 The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. New, more efficient boats with lower running costs are then used. Which point represents the new equilibrium? S3 S1 B S2 A price X C D D2 D1 O quantity
Mark scheme: D
Q7 · The diagram shows the demand for and the supply of bread
7 The diagram shows the demand for and the supply of bread. S price P1 D O quantity A maximum price P1 is fixed by the government. What is likely to be the immediate result of this? A a movement of the demand curve to the right B a movement of the supply curve to the right C a shortage of bread D a surplus of bread
Mark scheme: C
Q8 · The diagram shows a market for wheat that is in equilibrium
8 The diagram shows a market for wheat that is in equilibrium. T S X price V W D O Y Z quantity Which area represents the total revenue for wheat farmers? A OTXY B OVXZ C OVXY D OWXY
Mark scheme: C
Q9 · The diagram shows the supply curve for a good
9 The diagram shows the supply curve for a good. S 4 price ($) 2 0 10 20 30 quantity (units) What is the price elasticity of supply when the price rises from $2 to $4? A 0.2 B 0.5 C 1 D 2
Mark scheme: B
Q10 · What is an example of occupational mobility of labour?
10 What is an example of occupational mobility of labour? A A Japanese car manufacturer locates in England. B A nurse returns to work after her children have grown up. C A student takes an evening job in a restaurant. D Farm workers retrain as call-centre workers.
Mark scheme: D
Q11 · A person is most likely to save more when there is an increase in a country’s A exchange…
11 A person is most likely to save more when there is an increase in a country’s A exchange rate. B inflation rate. C interest rates. D money supply.
Mark scheme: C
Q12 · One of the functions of money is to act as a measure of value
12 One of the functions of money is to act as a measure of value. What does this mean? A Money allows people to borrow and lend. B Money allows people to save their surplus income. C Money is used to buy goods and services. D Money is used to compare the worth of different goods and services.
Mark scheme: D
Q13 · What is a function of a trade union?
13 What is a function of a trade union? A to negotiate workers’ contracts B to promote workers to more responsible jobs C to recruit workers for the firm D to supervise the workers in the firm
Mark scheme: A
Q14 · A firm which sells its product for $6 has the following total costs
14 A firm which sells its product for $6 has the following total costs. output (units) 0 10 20 30 total costs ($) 40 100 120 150 Which statement is correct? A Average cost is lowest when 10 units are produced. B The firm breaks even when 20 units are sold. C The firm has no fixed costs. D Total variable costs fall continuously over these outputs.
Mark scheme: B
Q15 · In August 2008, Infosys, an Indian information technology company, bought Axon, a UK…
15 In August 2008, Infosys, an Indian information technology company, bought Axon, a UK information technology company. Which type of integration is this? A conglomerate B horizontal C vertical backwards D vertical forwards
Mark scheme: B
Q16 · Barilla, an Italian company, is the world’s largest pasta maker
16 Barilla, an Italian company, is the world’s largest pasta maker. It also produces bread. In 2006 its bread production contributed $1.5 billion (bn) to its total revenue of $5.1 bn. Overall profit was $0.6 bn. What was the total cost to Barilla of producing pasta and bread in 2006? A $2.1 bn B $3.0 bn C $3.6 bn D $4.5 bn
Mark scheme: D
Q17 · South African companies are planning to undertake major investment in Zimbabwe in order…
17 South African companies are planning to undertake major investment in Zimbabwe in order to mine platinum. If this investment occurs, what would happen in the short term to the supply of platinum, the price of platinum and the profits of the companies? supply curve price of platinum profits of the companies A no change rise rise B shift to left no change fall C shift to right rise rise D shift to right fall uncertain
Mark scheme: D
Q18 · What is correct about a monopoly?
18 What is correct about a monopoly? A It may benefit from economies of scale. B It must be privately not state owned. C Its costs are always higher than those of a firm in perfect competition. D It sells only one product.
Mark scheme: A
Q19 · The directors of a firm have to discuss the following topics
19 The directors of a firm have to discuss the following topics. Which topic is least likely to be directly affected by the government’s influence on the firm? A health and safety laws B the interest it pays on borrowed money C the minimum wage it must pay its workers D the replacement of the director of finance
Mark scheme: D
Q20 · What is a direct tax?
20 What is a direct tax? A a tax on electricity B a tax on imported goods C a tax on services D a tax on income and wealth
Mark scheme: D
Q21 · A government achieves a high rate of economic growth
21 A government achieves a high rate of economic growth. How may this conflict with other government aims? A It may increase government income. B It may increase incomes for the lower paid. C It may increase the supply of exports. D It may increase the volume of imports.
Mark scheme: D
Q22 · What name is given to the type of unemployment that occurs while people search for new…
22 What name is given to the type of unemployment that occurs while people search for new jobs? A cyclical B frictional C residual D structural
Mark scheme: B
Q23 · Between 2002 and 2007, approximately 18 million Latin American households moved out of…
23 Between 2002 and 2007, approximately 18 million Latin American households moved out of poverty. Which change in the region is most likely to have caused this fall in poverty? A an increase in economic growth B an increase in inflation C a reduction in employment D a reduction in exports
Mark scheme: A
Q24 · The retail price index of a country rose during a year from 200 to 240
24 The retail price index of a country rose during a year from 200 to 240. What was the annual rate of inflation? A 20 % B 40 % C 240 % D 440 %
Mark scheme: A
Q25 · India has a more evenly distributed income than China but a greater proportion of its…
25 India has a more evenly distributed income than China but a greater proportion of its population living on less than $1 a day. What can be concluded from this statement? A China has a smaller proportion of very rich people. B India has a greater proportion of poor people. C Most of the population of India live on $1 a day. D The average income in China is higher than that in India.
Mark scheme: B
Q26 · Why is the Human Development Index (HDI) a better indicator of comparative living…
26 Why is the Human Development Index (HDI) a better indicator of comparative living standards than Gross Domestic Product (GDP) per head? A It includes international trade. B It includes more measures of living standards. C It is measured in money terms. D It is more directly linked to economic growth.
Mark scheme: B
Q27 · Gross Domestic Product (GDP) per capita is commonly used as an indicator of the…
27 Gross Domestic Product (GDP) per capita is commonly used as an indicator of the comparative level of development in different countries. What does not lead to difficulties when using this as a comparison between countries? A different climatic conditions B different international exchange rates C different population growth rates D different rates of inflation
Mark scheme: C
Q28 · Which policy would best enable a government to encourage greater specialisation in the…
28 Which policy would best enable a government to encourage greater specialisation in the use of its country’s resources? A encouraging diversification in industry B protecting small businesses C reducing tariffs on imports into its country D subsidising job creation in rural areas
Mark scheme: C
Q29 · What is likely to happen in a developing country as it becomes more developed?
29 What is likely to happen in a developing country as it becomes more developed? A A lower percentage of people will go to university. B Average life expectancy will rise. C The rate of population growth will increase. D The tertiary sector will decline in importance.
Mark scheme: B
More questions on Differences in economic development between countries
Q30 · There was an increase in the value of the United States (US) dollar against the South…
30 There was an increase in the value of the United States (US) dollar against the South African Rand. What is a result of this? A an increase in the number of exports from the US to South Africa B an increase in the number of imports to the US from South Africa C fewer people from the US spend holidays in South Africa D more people from South Africa spend holidays in the US
Mark scheme: B
What was in this paper
The subtopics covered by these 30 questions, and how many questions each got. Open one in a new tab to see every Cambridge question on it.
3Living standards2Money and banking2Poverty2The nature of the economic problem2Differences in economic development between countries1Employment and unemployment1Firms1Fiscal policy1Foreign exchange rates1Inflation and deflation1International specialisation1Market failure1Market structure1Monetary policy1Opportunity cost1Price changes1Price elasticity of supply (PES)1Supply1The factors of production1The macroeconomic aims of government1The role of government1Trade unions1Workers1What you needed in this session
Cambridge’s own grade thresholds for 2010 May/June, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.