Cambridge IGCSE Economics 0455 — 2012 Oct/Nov Paper 1 · Variant 3
0455/13/O/N/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 · In China the government is concerned about the level of poverty and the need for more…
1 In China the government is concerned about the level of poverty and the need for more resources in the poorer regions of the country. As a result, it is increasing its expenditure there and reducing it in the wealthier regions. Which economic concept does this government policy illustrate best? A diseconomies of scale B market forces C opportunity cost D specialisation
Mark scheme: C
Q2 · As the need for energy increases, energy suppliers use a mix of resources
2 As the need for energy increases, energy suppliers use a mix of resources. Which resource is renewable? A coal B gas C oil D water
Mark scheme: D
Q3 · A public limited company delivers groceries which customers order on the Internet
3 A public limited company delivers groceries which customers order on the Internet. What is an example for the firm of the factor of production called capital? A the computers required to receive the orders B the fuel used by the delivery vehicles C the money required to pay the firm’s costs D the shares it sells on the stock exchange
Mark scheme: A
Q4 · What is likely to play a more important role in a mixed economy than in a free market…
4 What is likely to play a more important role in a mixed economy than in a free market economy? A consumer wishes B government intervention C international trade D the profit motive
Mark scheme: B
Q5 · What necessarily happens when an external benefit exists?
5 What necessarily happens when an external benefit exists? A Social benefit is greater than private benefit. B Social benefit is greater than social cost. C Social cost is equal to private cost. D Social cost is greater than private cost.
Mark scheme: A
Q6 · A supply curve for a commodity is drawn to show how quantity supplied varies with A…
6 A supply curve for a commodity is drawn to show how quantity supplied varies with A government taxes. B income. C tastes. D the price of the commodity.
Mark scheme: D
Q7 · In June 2010, a government published a proposal to increase Value Added Tax (Goods and…
7 In June 2010, a government published a proposal to increase Value Added Tax (Goods and Services Tax) on some goods from January 2011. Between June 2010 and January 2011 consumers bought more of those goods before the price increase occurred. After January, consumers bought less of the goods. How would the changes be shown on a demand diagram for the goods? from June-January after January A a movement down the curve a shift of the curve to the right B a movement up the curve a shift of the curve to the right C a shift of the curve to the left a movement down the curve D a shift of the curve to the right a movement up the curve
Mark scheme: D
Q8 · A developer built some large houses in a rural area which poorer people could not afford
8 A developer built some large houses in a rural area which poorer people could not afford. The houses destroyed an area of natural beauty. What type of market failure resulted from the development? A inequality of income B lack of information C negative externality D price discrimination
Mark scheme: C
Q9 · The market for a normal good is in equilibrium at point X
9 The market for a normal good is in equilibrium at point X. Consumers’ incomes rise and the government gives a subsidy to the producers of the good. In which area of the diagram will the new equilibrium be? supply A price D X B C demand O quantity
Mark scheme: B
Q10 · What work is in the primary sector?
10 What work is in the primary sector? A delivering milk B designing gardens C growing fruit trees D selling agricultural fertiliser
Mark scheme: C
Q11 · What are the actions of a trade union intended to achieve in the long run?
11 What are the actions of a trade union intended to achieve in the long run? A benefits to society B harm to employers C help for members D reduced company profits
Mark scheme: C
Q12 · An individual has various financial assets
12 An individual has various financial assets. What is the most easily available as cash? A a current (checking) bank account B government bonds C share certificates in a public company D time deposits in a savings bank
Mark scheme: A
Q13 · Why do banknotes function as money?
13 Why do banknotes function as money? A They are backed by gold. B They are durable. C They are generally acceptable. D They have intrinsic value.
Mark scheme: C
Q14 · The table shows the proportion of income saved for different age groups
14 The table shows the proportion of income saved for different age groups. age 15 – 29 30 – 39 40 – 49 50 – 62 63+ % of income saved –34 % – 4 % 18 % 29 % –23 % What can be concluded from this data? A The 50 – 62 age group has the highest level of income. B The 50 – 62 age group saves the highest proportion of its income. C The older age groups earn more than the younger age groups. D The youngest age group spends more than the oldest age group.
Mark scheme: B
Q15 · A firm opens new branches in four different cities
15 A firm opens new branches in four different cities. As a result, it can negotiate a better deal from its foreign suppliers because it purchases larger quantities. However, it finds the distance between branches causes organisational problems. What describes the result for the firm? A an external economy of scale and an external diseconomy of scale B an external economy of scale and an internal diseconomy of scale C an internal economy of scale and an external diseconomy of scale D an internal economy of scale and an internal diseconomy of scale
Mark scheme: D
Q16 · As a firm increases its weekly output from 10 units to 20 units, its average cost falls…
16 As a firm increases its weekly output from 10 units to 20 units, its average cost falls from $15 to $10. Which of its costs have risen? A fixed costs and variable costs only B fixed costs, variable costs and total costs C total costs only D variable costs and total costs only
Mark scheme: D
Q17 · A group of hotels, owned and operated in France, needs its staff to be able to speak a…
17 A group of hotels, owned and operated in France, needs its staff to be able to speak a number of languages so it employs people from different countries. Different firms, providing tours from other countries, send customers to the hotels in France. The hotel group has shares issued on the stock exchange. What type of company is the hotel group? A a multi-national B a partnership C a private company D a public company
Mark scheme: D
Q18 · The graphs show the average total cost (ATC) curves of four firms and how they change as…
18 The graphs show the average total cost (ATC) curves of four firms and how they change as output increases. Which firm has the highest fixed costs? A B C D ATC ATC cost cost cost cost $ $ $ $ ATC ATC O output O output O output O output
Mark scheme: A
Q19 · Machu Picchu is Peru’s most popular tourist destination
19 Machu Picchu is Peru’s most popular tourist destination. One train company, PeruRail, operates a monopoly service up to the site. Why might competition on the route increase the fares paid by passengers? A Competitive firms have more influence on price than a monopoly. B Competitive firms never make a loss. C Less advantage may be taken of economics of scale. D More profit may be available to spend on new technology to reduce costs of production.
Mark scheme: C
Q20 · Which government policy would best protect the environment?
20 Which government policy would best protect the environment? A encouraging economic growth B exploiting natural resources C increasing tax on fuel D removing controls on industry
Mark scheme: C
Question 21
21 Russia exports wheat. In 2010, because of a bad harvest, the Russian Government prevented the export of wheat to keep enough supplies for domestic use. What happened as a result of the government’s action? A Prices were fixed by the wheat producers. B The amount produced was determined by the government. C The price of wheat abroad fell. D There was a redistribution of domestic production.
Mark scheme: D
Q22 · A country has a proportional system of taxation
22 A country has a proportional system of taxation. A person pays $500 tax when earnings are $5000. How much tax will be paid if earnings rise to $12 000? A $120 B $500 C $1200 D $7500
Mark scheme: C
Q23 · The graph shows government revenue and spending in a country, as a percentage of GDP…
23 The graph shows government revenue and spending in a country, as a percentage of GDP, between 2004 and 2011. 48 46 government spending 44 42 % of 40 GDP 38 36 government revenue 34 32 2004 2005 2006 2007 2008 2009 2010 2011 year What can be concluded from the graph? A The balance of payments position improved. B The borrowing of the government increased. C The economy went into recession (economic downturn). D The government budget moved from deficit to surplus.
Mark scheme: D
Q24 · An increase in online banking by customers using home computers has reduced the level of…
24 An increase in online banking by customers using home computers has reduced the level of employment in the banking sector of developed countries. What describes this kind of unemployment? A frictional B regional C seasonal D technological
Mark scheme: D
Q25 · China has become South Africa’s largest trading partner
25 China has become South Africa’s largest trading partner. In 2009, 16 % of South Africa’s imports came from China while 11 % of its exports went to China. China is also investing in infrastructure designed to help increase production in South Africa. What can be concluded from this information? A China is investing more in South Africa than in other countries. B China’s GDP will grow more slowly than South Africa’s GDP. C GDP in South Africa is likely to rise. D South Africa imported a greater number of goods and services from China than it exported to China.
Mark scheme: C
Q26 · What is usually true of workers approaching retirement when they are compared with new…
26 What is usually true of workers approaching retirement when they are compared with new entrants to the workforce? A They will be more adaptable. B They will be more experienced. C They will be more mobile. D They will be physically stronger.
Mark scheme: B
Q27 · In 2010, Nigeria had a birth rate of 36 and an infant mortality rate of 94
27 In 2010, Nigeria had a birth rate of 36 and an infant mortality rate of 94. What can be concluded from this information? A Nigeria experienced a natural decrease in population. B Nigeria’s population increased. C 36 children were born per hundred of the population. D 94 babies died before their first birthday out of every thousand babies born.
Mark scheme: D
Q28 · The table shows the percentages of consumer spending on different items in four…
28 The table shows the percentages of consumer spending on different items in four countries, which have similar geographical conditions and climate. Which country is likely to have the highest standard of living? percentage of consumer spending on each item country food housing transport A 20 30 30 B 40 25 15 C 50 20 10 D 45 20 15
Mark scheme: A
Q29 · A Japanese car manufacturer decided to produce its cars in a factory in Europe
29 A Japanese car manufacturer decided to produce its cars in a factory in Europe. What would not be a reason why they might have chosen to do this? A cheaper wage costs in Europe B the availability of raw materials C to gain external economies from skilled labour in Europe D to increase Japanese self-sufficiency
Mark scheme: D
Q30 · A country imports oil, which has risen in price and which is used for production and for…
30 A country imports oil, which has risen in price and which is used for production and for distribution. There has also been an increase in unemployment in the country. Businesses have closed and total consumer demand has fallen. What is likely to happen to the balance of trade and economic growth? balance of trade economic growth A improve likely to increase B uncertain likely to decrease C worsen likely to decrease D worsen likely to increase
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.
3Firms2Firms’ costs, revenue and objectives2Fiscal policy2Living standards2Market failure2Money and banking2The factors of production2Current account of balance of payments1Demand1Employment and unemployment1Firms and production1Households1Market structure1Mixed economic system1Population1Price changes1Supply1The role of government1Trade unions1Workers1What you needed in this session
Cambridge’s own grade thresholds for 2012 Oct/Nov, Paper 1 · Variant 3. A higher threshold means an easier paper — the bar moves with how the cohort did.