Cambridge IGCSE Economics 0455 — 2013 Oct/Nov Paper 1 · Variant 1

Question 1

1 What is a reason why firms making similar products sometimes locate near each other? A competition is decreased B there are external economies of scale C there are internal economies of scale D transport costs may be eliminated

Accepted Answer

B

Question 2

2 The diagrams represent total cost curves (TC) of four firms in the short run. Which firm has only fixed costs? A B C D TC TC TC costs costs costs TC costs O quantity O quantity O quantity O quantity

Accepted Answer

C

Question 3

3 To achieve horizontal integration a record company producing compact discs (CDs) could merge with another firm. What would this firm most likely be doing? A owning shops selling CDs B producing CDs C producing CD players D producing machinery used in the making of CDs

Accepted Answer

B

Question 4

4 What is a difference between a monopoly and a perfectly competitive firm? A A monopoly always has economies of scale and a perfectly competitive firm has diseconomies of scale. B A monopoly always operates in the public sector and a perfectly competitive firm always operates in the private sector. C A monopoly is a price maker and a perfectly competitive firm is a price taker. D A monopoly seeks to maximise profits and a perfectly competitive firm seeks to maximise output.

Accepted Answer

C

Question 5

5 An entrepreneur started a small business making candles. In the first month 1000 candles were made. The costs were $ raw materials 1000 packaging 800 insurance 100 depreciation 100 rent 500 What were the average variable costs for the month? A $1.00 B $1.80 C $1.90 D $2.00

Accepted Answer

B

Question 6

6 Which aim of government policy is most likely to be achieved by an increase in interest rates? A economic growth B greater equality of income C full employment D price stability

Accepted Answer

D

Question 7

7 Why might a government encourage a monopoly? A It can have high average costs. B It can compete against foreign firms. C It can prevent innovation. D It can make excessive profits.

Accepted Answer

B

Question 8

8 Which combination of government policies is most likely to be successful at reducing unemployment? A budgeting for a surplus and lowering interest rates B budgeting for a deficit and raising interest rates C budgeting for a surplus and raising interest rates D budgeting for a deficit and lowering interest rates

Accepted Answer

D

Question 9

9 A government wishes to raise the general standard of living in its country. In the short run, which policy would be the most likely to achieve this aim? A preventing the merger of two companies into a monopoly B raising taxation to repay government debts C reducing the rate of income tax while maintaining the services it provides D spending more on roads in rural areas rather than in city centres

Accepted Answer

C

Question 10

10 Sam wrote a list of how he would prefer to spend his Saturday afternoon. first choice go to a cricket match second choice watch the annual town parade third choice go to the cinema fourth choice visit relatives Unfortunately a thunderstorm caused the cricket match and the town parade to be cancelled. Sam went to the cinema. What was the opportunity cost of going to the cinema? A going to the cricket match B watching the town parade C visiting his relatives D losing his Saturday free time

Accepted Answer

C

Question 11

11 How does a production possibility curve show that scarcity exists? A It shows that a rise in demand for one of the products increases its price. B It shows that as more resources are used to produce a product, its price rises. C It shows that at any point outside the production possibility curve an economy is wasting resources. D It shows that there is a limit to the quantity of products that can be produced with existing resources and technology.

Accepted Answer

D

Question 12

12 In which case is it possible to set the level of reward before production takes place for the first factor of production but not for the second? first factor second factor A capital land B enterprise labour C labour capital D land enterprise

Accepted Answer

D

Question 13

13 In the 2016 Olympics in Brazil, the opening ceremony will take place in the Maracana Stadium, which can seat 82 000 spectators. It is expected that all tickets for the ceremony will be sold quickly, leaving many people dissatisfied. What can be concluded from this? A Price elasticity of demand for tickets will be perfectly elastic. B Some people will be able to resell their tickets at a higher price than they paid for them. C The Olympic authority will make more tickets available for sale. D This will be an example of market failure.

Accepted Answer

B

Question 14

14 The diagrams show different conditions of demand and supply for a product. In which diagram would market price remain unchanged if consumers’ incomes fell? A B C D S D S S price price price price S D D D O quantity O quantity O quantity O quantity

Accepted Answer

D

Question 15

15 In 2011, a company selling milk in glass bottles replaced them with new plastic bottles. When they were introduced, the equilibrium quantity on the market fell. What could be a reason for this fall? A Consumers preferred the new bottle because it was lighter to carry. B Milk from the farms used to fill the bottle cost more. C The bottle was cheaper than the existing glass bottle to produce. D The new bottle was introduced with a successful advertising campaign.

Accepted Answer

B

Question 16

16 Which change would make the supply of a product more price elastic? A an increase in the number of close substitutes for the product B an increase in the proportion of firms working at full capacity C a reduction in the time taken to make the product D a reduction in the time that the product can be stored

Accepted Answer

C

Question 17

17 Developers want to increase the size of a major retail shopping area in a city. It is thought that the proposal would create hundreds of jobs, be profitable for the shops but cause major traffic congestion. What economic concepts are involved in this statement? A external cost and private benefit B income distribution and inelastic demand C private investment and a decrease in supply D social benefit and perfect competition

Accepted Answer

A

Question 18

18 Which will encourage domestic producers to grow more maize? A granting subsidies to maize producers B increasing the sales tax on maize C removing guaranteed minimum prices for maize D removing quotas on imported maize

Accepted Answer

A

Question 19

19 What will be the most likely effect of a fall in interest rates on saving and borrowing? saving borrowing A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

B

Question 20

20 When will a trade union find it easier to achieve higher wages for its members? A when consumers demand more of the product made B when the company has a decrease in profits C when the cost of raw materials increases D when unemployment increases

Accepted Answer

A

Question 21

21 What might be a direct benefit to the individual worker of a specialised job? A Specialisation enables a better quality product to be produced. B Specialisation enables the firm to introduce more machinery. C Specialisation enables the worker to become more skilled. D Specialisation makes better use of resources.

Accepted Answer

C

Question 22

22 The table shows the change in real incomes for a number of occupations between 1978 and 2008. change in real income occupation % doctors 153 lawyers 114 accountants 60 bricklayers 37 bus and coach drivers 19 fork-lift truck drivers –5 What can be concluded from the table? A All occupations were better off in 2008 than in 1978. B Fork-lift truck drivers earned the lowest wages in 2008. C Doctors have earned more than lawyers since 1978. D Professionals received higher percentage increases in income than manual workers.

Accepted Answer

D

Question 23

23 Which function of money enables people to compare the worth of different products? A medium of exchange B standard for deferred payments C store of value D unit of account

Accepted Answer

D

Question 24

24 Which of the following could not be a reason for imposing tariffs on imported goods? A to encourage self sufficiency B to lower the general price level within the economy C to protect a growing domestic industry D to reduce a balance of trade deficit

Accepted Answer

B

Question 25

25 Which of the following is an export of Jamaica? A  a loan to Jamaica by the International Monetary Fund B  Jamaican holidays taken by American tourists C  dividends paid by a company in Jamaica to its American shareholders D  sales of Japanese cars in Jamaica

Accepted Answer

B

Question 26

26 A developing country’s two major sources of income from international trade are fishing and tourism. If the country’s exchange rate depreciated, what is likely to happen? A Imported goods would become cheaper for local people. B The country would definitely become poorer. C The price of fish sold as exports would become cheaper. D Tourists to the country would be discouraged by higher prices.

Accepted Answer

C

Question 27

27 In some developing countries a large percentage of the population is involved in subsistence farming. What can be concluded from this? A Each family will be able to produce enough to live on. B Production is unlikely to be capital intensive. C Production will be efficient. D There will be a high level of trade.

Accepted Answer

B

Question 28

28 A country has a falling birth rate and a rising death rate while an increasing number of its working age adults (16-60 years) are seeking employment abroad. How will this probably affect the numbers in the different age groups in the country? under 16 years 16-60 years over 60 years A fall fall fall B fall rise rise C rise fall rise D rise rise fall

Accepted Answer

A

Question 29

29 Which would best indicate the start of an economic recession? A falling interest rates B fluctuating levels of employment C negative growth of GDP D steadily increasing price levels

Accepted Answer

C

Question 30

30 The table shows the change in the labour force in Bangladesh between 2006 and 2009. group 2006 (millions) 2009 (millions) urban male labour force 8.9 9.7 urban female labour force 2.8 3.1 total urban labour force 11.7 12.8 rural male labour force 28.5 30.5 rural female labour force 9.3 10.4 total rural labour force 37.8 40.9 Which statement is most likely to be consistent with these statistics? A Farming is the major employer in the economy. B Male workers are more mobile than female workers. C The absolute increase in the labour force is greater in urban areas than rural areas. D The supply of female workers has fallen.

Accepted Answer

A

Cambridge IGCSE Economics 0455 — 2013 Oct/Nov Paper 1 · Variant 1

Question paper12 pages

Mark scheme2 pages

Questions as text

Q1 · What is a reason why firms making similar products sometimes locate near each other?

Q2 · The diagrams represent total cost curves (TC) of four firms in the short run

Q3 · To achieve horizontal integration a record company producing compact discs (CDs) could…

Q4 · What is a difference between a monopoly and a perfectly competitive firm?

Q5 · An entrepreneur started a small business making candles

Q6 · Which aim of government policy is most likely to be achieved by an increase in interest…

Q7 · Why might a government encourage a monopoly?

Q8 · Which combination of government policies is most likely to be successful at reducing…

Q9 · A government wishes to raise the general standard of living in its country

Q10 · Sam wrote a list of how he would prefer to spend his Saturday afternoon

Q11 · How does a production possibility curve show that scarcity exists?

Q12 · In which case is it possible to set the level of reward before production takes place for…

Q13 · In the 2016 Olympics in Brazil, the opening ceremony will take place in the Maracana…

Q14 · The diagrams show different conditions of demand and supply for a product

Q15 · In 2011, a company selling milk in glass bottles replaced them with new plastic bottles

Q16 · Which change would make the supply of a product more price elastic?

Q17 · Developers want to increase the size of a major retail shopping area in a city

Q18 · Which will encourage domestic producers to grow more maize?

Q19 · What will be the most likely effect of a fall in interest rates on saving and borrowing?

Q20 · When will a trade union find it easier to achieve higher wages for its members?

Q21 · What might be a direct benefit to the individual worker of a specialised job?

Q22 · The table shows the change in real incomes for a number of occupations between 1978 and…

Q23 · Which function of money enables people to compare the worth of different products?

Q24 · Which of the following could not be a reason for imposing tariffs on imported goods?

Q25 · Which of the following is an export of Jamaica?

Q26 · A developing country’s two major sources of income from international trade are fishing…

Q27 · In some developing countries a large percentage of the population is involved in…

Q28 · A country has a falling birth rate and a rising death rate while an increasing number of…

Q29 · Which would best indicate the start of an economic recession?

Q30 · The table shows the change in the labour force in Bangladesh between 2006 and 2009

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