Cambridge IGCSE Economics 0455 — 2011 Oct/Nov Paper 1 · Variant 1

Question 1

1 Every business organisation faces the problem of satisfying wants. What is the reason why wants are not fully satisfied? A An economy can only produce a limited amount of goods and services. B Governments cannot print enough money to pay for goods and services. C There is an over-production of goods and services by business organisations. D Workers are too skilled for the requirements of the jobs available.

Accepted Answer

A

Question 2

2 A university rejects 2000 qualified applicants who wish to study there. What factor of production could have caused the university to make this decision? A infinite quantity of capital B scarcity of labour C surplus of land D unlimited supply of enterprise

Accepted Answer

B

Question 3

3 The diagram shows the choices for an individual between leisure and earnings. 24 20 16 hours of leisure X 12 per day Y 8 4 0 0 20 40 60 80 100 120 earnings $ What is the opportunity cost to the individual of the extra earnings when moving from position X to position Y? A $20 B $80 C 4 hours of leisure per day D 8 hours of leisure per day

Accepted Answer

C

Question 4

4 How are economic decisions determined in a pure market system? A by a mixture of market forces and government regulation B by central planners of production and consumption C by government regulation of the price mechanism D by the forces of demand and supply

Accepted Answer

D

Question 5

5 Wet weather in 2009 led to a fall in the sales of summer clothes. To support businesses the government reduced the sales tax (VAT). How would these events be shown on a demand and supply diagram for summer clothes? demand curve supply curve A move to the left move to the right B move to the left no change C move to the right move to the left D no change move to the right

Accepted Answer

A

Question 6

6 Drought in African countries often results in poor harvests. Other countries then help by sending quantities of food. What are the likely results of these events for the price of food in the drought-affected countries? A It will fall and then rise. B It will rise and continue to rise. C It will rise and remain at this higher level. D It will rise and then fall.

Accepted Answer

D

Question 7

7 The graphs, drawn to the same scale, show the demand curves of four firms. The market price is $10. The price then falls to $8. Which firm will have the largest increase in total revenue? A B C D D D price price price price $ $ $ $ 10 D 10 10 10 D 0 Q1 0 Q1 0 Q1 0 Q1 quantity quantity quantity quantity

Accepted Answer

A

Question 8

8 Which person would wish to encourage the use of the market system? A someone who believes that people should have equal living standards B someone who believes that people should have freedom of action C someone who believes that profit maximisation is wrong D someone who believes that the government should correct peoples’ bad behaviour

Accepted Answer

B

Question 9

9 What is an example of an external cost? A a company’s transport costs B the cost of bringing about a merger C the cost of buying components from suppliers D the cost of industrial pollution

Accepted Answer

D

Question 10

10 Which motive is most likely to increase the wish to open a savings account? A to have cash immediately available B to prepare for future expenditure C to satisfy essential needs D to widen present consumption choices

Accepted Answer

B

Question 11

11 Share prices on the stock market are most likely to rise if A employment falls. B interest rates fall. C interest rates rise. D tax rates rise.

Accepted Answer

B

Question 12

12 The ways of making and receiving payments continue to develop. As well as cash, debit cards and credit cards, mobile (cell) phones are now being used to make payments. Which method of paying for products provides no information to sellers about their customers? A cash B debit cards C credit cards D mobile (cell) phones

Accepted Answer

A

Question 13

13 A group of workers in a firm join a trade union. What would the union be expected to do? A arrange for labour-saving technology to be introduced B discuss safety issues in the workplace with the employer C ensure job security by promoting the firm’s products through advertising D negotiate new contracts with major buyers of the firm’s products

Accepted Answer

B

Question 14

14 In 2009, the Chinese Government tried to increase household spending. Which policy measure would have been most likely to achieve this objective? A an increase in both direct and indirect taxes B a reduction in subsidies given to manufacturers C a requirement for commercial banks to reduce their lending D a switch from public to private sector provision of health care and pensions

Accepted Answer

D

Question 15

15 The table shows how a firm’s total cost rises with changes in output. output total cost ($) 0 20 000 1000 30 000 2000 35 000 3000 40 000 4000 45 000 5000 50 000 What is the average fixed cost of producing 5000 units? A $4 B $5 C $6 D $10

Accepted Answer

A

Question 16

16 General Motors, a large multi-national company based in the United States, sold some of its European car assembly plants to other car manufacturers during the world recession (economic downturn) in 2009. Which economic reason would have been most likely to influence this decision? A to benefit from horizontal integration of manufacturing B to diversify and expand its product range C to encourage vertical integration of sales and production D to reduce its excess capacity in car production

Accepted Answer

D

Question 17

17 A firm is producing an output which enables it to make more than normal profit. What must be true at that output? A Average revenue must be greater than total revenue. B Average revenue must equal average cost. C Total revenue must be greater than total cost. D Variable cost must equal price.

Accepted Answer

C

Question 18

18 Which statement about total fixed cost is correct? A It falls as output increases. B It is calculated by adding total cost and total variable cost. C It is calculated by dividing total cost by output. D It must be paid even if output is zero.

Accepted Answer

D

Question 19

19 Which type of business organisation has its shares quoted on a stock exchange? A co-operative B private company C public company D public corporation

Accepted Answer

C

Question 20

20 What is a long-term advantage of economic growth? A employment falls B incomes rise C prices rise D savings fall

Accepted Answer

B

Question 21

21 A tax on which of the following is usually progressive and is paid by a large number of tax payers? A company profits B goods and services C incomes D sales of shares

Accepted Answer

C

Question 22

22 Which government policy would be likely to help local companies expand? A encouraging investment by foreign companies B increasing income tax C providing a subsidy D raising interest rates

Accepted Answer

C

Question 23

23 Between December 2008 and August 2009, the Central Bank of South Africa cut the rate of interest from 12.5 % to 7 %. What effect would this action be expected to have on economic growth and unemployment? economic growth unemployment A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

C

Question 24

24 There was a fall in investment spending by businesses in the third quarter of 2008. What would be the likely result of this? A an increase in economic growth B an increase in exports C an increase in incomes D an increase in unemployment

Accepted Answer

D

Question 25

25 What is typical of a recession (economic downturn)? A falling Gross Domestic Product B falling unemployment C rising living standards D rising retail price index

Accepted Answer

A

Question 26

26 The table gives information about four countries. Which country is likely to have the lowest standard of living? life expectancy GNP per head adult literacy country at birth (years) ($) (%) A Ethiopia 43 110 66 B India 59 350 43 C Nigeria 51 290 43 D Mozambique 45 80 39

Accepted Answer

D

Question 27

27 What is most likely to happen if there is a fall in the death rate while the birth rate and migration remain unchanged? A The population structure will remain the same. B The population will increase. C There will be a change in the proportion of men to women. D The standard of living will increase.

Accepted Answer

B

Question 28

28 Developing countries are sometimes given aid by charities and foreign governments. Which aid programme would be least likely to lead to long-term economic growth? A the building of an irrigation system B the construction of a new airport C the distribution of gifts of food D the training of technical staff

Accepted Answer

C

Question 29

29 Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their own countries. What impact would this have on the Balance of Payments? A The current account balance of the developing countries would improve. B The current account balance of the US would improve. C The trade balance of the developing countries would improve. D The trade balance of the US would improve.

Accepted Answer

A

Question 30

30 The table gives the retail price of a paperback book as printed on its back cover. United Kingdom £6.99 Canada $11.99 (Canadian dollars) Australia $14.99 (Australian dollars) New Zealand $20.95 (New Zealand dollars) What is needed to make a clear comparison of the price in the four countries? A exchange rates B indirect tax rates C inflation rates D retail price indices

Accepted Answer

A

Cambridge IGCSE Economics 0455 — 2011 Oct/Nov Paper 1 · Variant 1

Question paper12 pages

Mark scheme2 pages

Questions as text

Q1 · Every business organisation faces the problem of satisfying wants

Q2 · A university rejects 2000 qualified applicants who wish to study there

Q3 · The diagram shows the choices for an individual between leisure and earnings

Q4 · How are economic decisions determined in a pure market system?

Q5 · Wet weather in 2009 led to a fall in the sales of summer clothes

Q6 · Drought in African countries often results in poor harvests

Q7 · The graphs, drawn to the same scale, show the demand curves of four firms

Q8 · Which person would wish to encourage the use of the market system?

Q9 · What is an example of an external cost?

Q10 · Which motive is most likely to increase the wish to open a savings account?

Q11 · Share prices on the stock market are most likely to rise if A employment falls

Q12 · The ways of making and receiving payments continue to develop

Q13 · A group of workers in a firm join a trade union

Q14 · In 2009, the Chinese Government tried to increase household spending

Q15 · The table shows how a firm’s total cost rises with changes in output

Q16 · General Motors, a large multi-national company based in the United States, sold some of…

Q17 · A firm is producing an output which enables it to make more than normal profit

Q18 · Which statement about total fixed cost is correct?

Q19 · Which type of business organisation has its shares quoted on a stock exchange?

Q20 · What is a long-term advantage of economic growth?

Q21 · A tax on which of the following is usually progressive and is paid by a large number of…

Q22 · Which government policy would be likely to help local companies expand?

Q23 · Between December 2008 and August 2009, the Central Bank of South Africa cut the rate of…

Q24 · There was a fall in investment spending by businesses in the third quarter of 2008

Q25 · What is typical of a recession (economic downturn)?

Q26 · The table gives information about four countries

Q27 · What is most likely to happen if there is a fall in the death rate while the birth rate…

Q28 · Developing countries are sometimes given aid by charities and foreign governments

Q29 · Many sportsmen and sportswomen from developing countries go to the United States (US) to…

Q30 · The table gives the retail price of a paperback book as printed on its back cover

What was in this paper

What you needed in this session

Other variants, same session

This paper, other years