Cambridge IGCSE Economics 0455 — 2012 May/June Paper 1 · Variant 1
0455/11/M/J/12 · 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 combination of resources and wants causes the economic problem?
1 Which combination of resources and wants causes the economic problem? resources wants A limited limited B limited unlimited C unlimited limited D unlimited unlimited
Mark scheme: B
Q2 · What does an economist mean by capital?
2 What does an economist mean by capital? A man-made goods that do not directly satisfy human wants B money used to set up new businesses and expand existing businesses C natural resources that will not be replaced D the ability to earn profits by combining resources to produce goods
Mark scheme: A
Q3 · A student leaves school and decides to spend the next two years at a college to improve…
3 A student leaves school and decides to spend the next two years at a college to improve her qualifications. What is the opportunity cost to the student of taking this decision? A the cost of the course fees at the college B the increase in job opportunities she will have as a result of her extra qualifications C the lost production due to her not being in work D the money she would have earned if she had been in work for the two years
Mark scheme: D
Q4 · What is found in a mixed economy but not a free market economy?
4 What is found in a mixed economy but not a free market economy? A banks B division of labour C price controls D profit motive
Mark scheme: C
Q5 · A large shop selling clothes opened in a town
5 A large shop selling clothes opened in a town. Its prices were much cheaper than other shops selling similar items. As a result many more customers came to the area. They also visited restaurants near the shop. The restaurants reported a 10 % increase in sales. What economic concept does the above statement best illustrate? A external benefit B inelastic demand C market failure D perfect competition
Mark scheme: A
Q6 · What is not held constant in constructing a demand schedule?
6 What is not held constant in constructing a demand schedule? A the incomes of consumers B the prices of complementary goods C the price of the good itself D the tastes of consumers
Mark scheme: C
Q7 · A shop sells chocolate birthday cakes
7 A shop sells chocolate birthday cakes. When the price was $15 it sold 40 cakes. It reduced the price to $10 and sold 60 cakes. What can be concluded from this? A The firm will make less profit because the price has fallen. B The firm will make more profit because sales have increased. C The price elasticity is inelastic because demand only increased by 50 %. D There is unit price elasticity because the firm’s revenue remained the same after the price change.
Mark scheme: D
Q8 · In 2010, a major oil leak from an oil rig affected many people living around the Gulf of…
8 In 2010, a major oil leak from an oil rig affected many people living around the Gulf of Mexico. What type of market failure did they experience? A monopoly exploitation B negative externality C price discrimination D rising tax burden
Mark scheme: B
Q9 · What changes would move the equilibrium in the diagram from point X to a new point within…
9 What changes would move the equilibrium in the diagram from point X to a new point within area Z? S Z X price D O quantity A a decrease in demand with a decrease in supply B a decrease in demand with an increase in supply C an increase in demand with a decrease in supply D an increase in demand with an increase in supply
Mark scheme: C
Q10 · What is likely to cause wages in an occupation to be high?
10 What is likely to cause wages in an occupation to be high? A a low level of responsibility B high unemployment C pleasant working conditions D the need for special skills
Mark scheme: D
Q11 · A trade union negotiates a basic weekly wage for its members with all employers in an…
11 A trade union negotiates a basic weekly wage for its members with all employers in an industry. In addition to the basic wage, one company also operates a production bonus at factory level. What is the aim of this company? A to give equal wages to all workers B to increase the efficiency of the workers C to introduce a minimum wage D to reduce its total wage bill
Mark scheme: B
Q12 · What might cause a rise in the proportion of income that a person saves?
12 What might cause a rise in the proportion of income that a person saves? A a fall in interest rates B a fall in population C a fall in real incomes D a fall in the income tax rate
Mark scheme: D
Q13 · For anything to be used as money, it must be A a fixed value
13 For anything to be used as money, it must be A a fixed value. B in fixed supply. C legal tender. D readily acceptable.
Mark scheme: D
Q14 · The table shows information for two workers
14 The table shows information for two workers. doctor window cleaner annual income ($) 50 000 20 000 total deductions ($) 10 000 8 000 Both workers save 10 % of their disposable income. How much is this in each case? doctor window cleaner A $12 000 $40 000 B $1 200 $4 000 C $40 000 $12 000 D $4 000 $1 200
Mark scheme: D
Q15 · Which is a diseconomy of scale?
15 Which is a diseconomy of scale? A Bulk buying reduces costs. B Communications deteriorate. C Employees are more motivated. D Technological improvements take place.
Mark scheme: B
Q16 · The financial director of a company adds up the cost for the firm of rent, insurance, new…
16 The financial director of a company adds up the cost for the firm of rent, insurance, new machinery and the chief executive’s basic salary. The director then divides that total by the firm’s output. What has the director calculated? A average fixed cost B average revenue C average total cost D average variable cost
Mark scheme: A
Q17 · Amit and Pardeep set up in business together
17 Amit and Pardeep set up in business together. Each has half of the shares in the business and limited liability. What type of business organisation is this? A a co-operative B a partnership C a private company D a public company
Mark scheme: C
Q18 · The table shows a firm’s average revenue and average cost
18 The table shows a firm’s average revenue and average cost. What level of output, A, B, C or D, gives maximum profit? output (units) average revenue ($) average cost ($) A 5 10 30 B 10 20 20 C 15 25 15 D 20 30 18
Mark scheme: D
Q19 · If a perfectly competitive market becomes a monopoly, what will be likely to increase and…
19 If a perfectly competitive market becomes a monopoly, what will be likely to increase and what will be likely to decrease? increase decrease A barriers to entry economies of scale B long-run profits competition C output market share D consumer choice prices
Mark scheme: B
Q20 · What would be most likely to reduce the rate of inflation?
20 What would be most likely to reduce the rate of inflation? A an increase in direct taxes B an increase in government expenditure C an increase in indirect taxes D an increase in the budget deficit
Mark scheme: A
Q21 · Why are schools sometimes built and run with government money?
21 Why are schools sometimes built and run with government money? A The private sector could not afford the cost of investment to build schools. B The private sector would have lower standards than government schools. C The provision of schools by the government ensures the widest choice for students. D There are external benefits from the provision of education.
Mark scheme: D
Q22 · Changes in demand mean that the government of Bangladesh hopes to switch some production…
22 Changes in demand mean that the government of Bangladesh hopes to switch some production from clothes made by low-paid, unskilled workers to medicines produced by highly-trained technicians. Which policies would enable Bangladesh to achieve this switch in employment and production? A close clothes factories and decrease imports B encourage immigration of foreign labour and introduce tariffs on clothing C invest in education and purchase new machines D substitute labour for machines and encourage emigration of workers from Bangladesh
Mark scheme: C
Q23 · A country has a tax system which places no tax on incomes below $5000, is proportional on…
23 A country has a tax system which places no tax on incomes below $5000, is proportional on incomes between $5000 and $10 000 and is progressive on incomes above $10 000. Which graph illustrates this tax system? A B % of income % of income paid in tax paid in tax 0 5 10 15 0 5 10 15 income $000s income $000s C D % of income % of income paid in tax paid in tax 0 5 10 15 0 5 10 15 income $000s income $000s
Mark scheme: A
Q24 · Between 2009 and 2010, an economy grew by 2.1 %
24 Between 2009 and 2010, an economy grew by 2.1 %. What is most likely to have increased during this period? A population B production C unemployment D wages
Mark scheme: B
Q25 · A government has a target of keeping inflation between 2 % and 3 %
25 A government has a target of keeping inflation between 2 % and 3 %. The diagram shows the rate of inflation over a four year period. 5 4 3 inflation rate of inflation 2 target % 1 0 1 2 3 4 –1 year What can be deduced from the diagram? A The government target was missed in two years. B The price level fell in two years. C The price level was at its highest in the first year. D The real value of money fell in three years.
Mark scheme: D
Q26 · After more than 70 years of production, a German car manufacturer, Volkswagen, has…
26 After more than 70 years of production, a German car manufacturer, Volkswagen, has decided to locate the production of its biggest selling car in developing countries, rather than Germany. What is the main advantage of this policy? A to access new management techniques B to make use of better infrastructure C to sell the car only to customers in developing countries D to train and employ labour at a lower cost
Mark scheme: D
Q27 · What is usually a characteristic of a developed country?
27 What is usually a characteristic of a developed country? A a dependency on primary product exports B high rates of economic growth C low levels of productivity D low rates of population growth
Mark scheme: D
More questions on Differences in economic development between countries
Q28 · The charts show the population structure of a country in 1950 and 2010
28 The charts show the population structure of a country in 1950 and 2010. age age male female male female 85+ 85+ 80 – 84 80 – 84 75 – 79 75 – 79 70 – 74 70 – 74 65 – 69 65 – 69 60 – 64 60 – 64 55 – 59 55 – 59 50 – 54 50 – 54 45 – 49 45 – 49 40 – 44 40 – 44 35 – 39 35 – 39 30 – 34 30 – 34 25 – 29 25 – 29 20 – 24 20 – 24 15 – 19 15 – 19 10 – 14 10 – 14 5 – 9 5 – 9 0 – 4 0 – 4 3 2 1 0 0 1 2 3 3 2 1 0 0 1 2 3 millions millions 1950 2010 What decreased between 1950 and 2010? A average age B number of people below 15 C number of people over 60 D total population
Mark scheme: B
Q29 · What is an advantage to a country of free trade?
29 What is an advantage to a country of free trade? A greater international diversification of production B greater range of domestically produced goods C greater reliance on other countries D greater specialisation in the use of resources
Mark scheme: D
Q30 · The diagram shows the value of exports and imports of goods of a country in five years
30 The diagram shows the value of exports and imports of goods of a country in five years. 30 25 key 20 exports $m 15 imports 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its trade balance? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5
Mark scheme: C
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.
3Firms2Firms’ costs, revenue and objectives2Globalisation, free trade and protection2Households2Inflation and deflation2Current account of balance of payments1Demand1Differences in economic development between countries1Economic growth1Firms and production1Fiscal policy1Market structure1Mixed economic system1Money and banking1Opportunity cost1Population1Price changes1Price elasticity of demand (PED)1Supply-side policy1The factors of production1The nature of the economic problem1Workers1What you needed in this session
Cambridge’s own grade thresholds for 2012 May/June, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.