Cambridge IGCSE Economics 0455 — 2013 Oct/Nov Paper 1 · Variant 3

1 A generating station was built to supply electricity to a rural village in Africa. What was the opportunity cost to the local economy? A the charge the villagers had to pay for the electricity B the cost of the building materials C the school that was not built as a result D the wages of the workers

Mark scheme: C

More questions on Opportunity cost

2 An economy produces different types of goods using its limited resources. This can be illustrated by a production possibility curve. X consumer goods O capital goods What does point X on the production possibility curve show? A All resources are used for the production of consumer goods. B More resources are allocated to producing capital goods than consumer goods. C Resources are allocated to produce a mixture of consumer and capital goods. D Total resources are not being fully utilised for production of these goods.

Mark scheme: C

More questions on Production possibility curve (PPC) diagrams

3 In a region of high unemployment, a manufacturer applied for a loan from the government so that the number of machines in an existing factory could be increased. It was hoped this would also enable more workers to be employed. Which factors of production does this decision involve? A labour and capital only B labour, capital and enterprise only C land, labour and capital only D land, labour, capital and enterprise

Mark scheme: B

More questions on The factors of production

4 Some resources in a market economy are switched from producing chocolate bars to producing ice cream. What could explain this? A an increase in the demand for ice cream and a decrease in the demand for chocolate bars B an increase in the profits from chocolate bars and a decrease in the profits from ice cream C an increase in the subsidy given to chocolate bar producers and a decrease in the subsidy given to ice cream producers D an increase in the tax on ice cream and a decrease in the tax on chocolate bars

Mark scheme: A

More questions on The role of markets in allocating resources

5 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

Mark scheme: D

More questions on Demand

6 Supermarkets sell petrol (gas) outside their stores. They reduce the price of petrol below other suppliers to attract more customers to buy goods in the store when they buy more petrol. If this were successful, how might it be shown on demand and supply diagrams? demand and supply demand and supply diagram for petrol diagram for the store’s goods A shift of the demand curve to the left shift of the supply curve to the left B shift of the demand curve to the right shift of the demand curve to the left C shift of the supply curve to the left shift of the supply curve to the right D shift of the supply curve to the right shift of the demand curve to the right

Mark scheme: D

More questions on Demand

7 Many people are life-long, devoted fans of the Los Angeles Lakers basketball team in the United States. The team’s stadium can seat 19 000 spectators and tickets are always sold out. What does this suggest about the price elasticity of demand and the price elasticity of supply of tickets to watch the Lakers play? price elasticity of demand price elasticity of supply A highly elastic perfectly elastic B highly elastic perfectly inelastic C highly inelastic perfectly elastic D highly inelastic perfectly inelastic

Mark scheme: D

More questions on Price elasticity of supply (PES)

8 What is an example of market failure? A a firm forced to close because of fierce competition B a firm polluting rivers with waste chemicals C a high price for an essential product D a shortage of an agricultural crop

Mark scheme: B

More questions on Market failure

9 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

Mark scheme: A

More questions on Supply

10 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

Mark scheme: B

More questions on Monetary policy

11 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

Mark scheme: A

More questions on Trade unions

12 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.

Mark scheme: C

More questions on Workers

13 A merchant travels abroad for a few days to buy samples of low-value goods from a range of manufacturers. Which property of money would be least necessary for this to take place smoothly? A acceptability B divisibility C durability D portability

Mark scheme: C

More questions on Money and banking

14 The table shows the average monthly wage in Bahraini Dinars (BHD) for different groups of workers in Bahrain in 2011. private sector public sector average monthly wage (BHD) 291 952 Bahraini citizen monthly wage (BHD) 589 910 non-Bahraini citizen monthly wage (BHD) 214 1208 Which statement is most likely to be consistent with these statistics? A Bahraini citizens are more productive than non-Bahraini citizens in the public sector. B The demand for Bahraini citizens is greater in the private sector than the public sector. C The public sector employs better educated workers than the private sector in Bahrain. D There is a greater supply of non-Bahraini citizens in the public sector than the private sector.

Mark scheme: C

More questions on Workers

15 Some lawyers charge very high rates per hour for their services. What best explains this? A The lawyers are very skilled. B The lawyers work long hours. C The lawyers work part-time and need a high hourly rate. D The law profession is a popular career.

Mark scheme: A

More questions on Workers

16 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

Mark scheme: C

More questions on Firms’ costs, revenue and objectives

17 39 of the 42 largest Chinese firms are described as state-owned enterprises. What form of organisation will these enterprises have? A co-operative B partnership C public company D public corporation

Mark scheme: D

More questions on Firms

18 When a firm produces 500 units its total variable cost is $1000. Its total fixed cost is $1500. What is the average cost of 500 units? A $2 B $3 C $5 D $2500

Mark scheme: C

More questions on Firms’ costs, revenue and objectives

19 In 2011, the UK-based Rio Tinto, the world’s second largest mining company, decided to bid for Australian Coal and Allied Industries, another mining company. Which economic concepts could be involved in this decision? A amalgamation and external economies B international finance and forward vertical integration C monopoly power and horizontal integration D multinational company and a more competitive market

Mark scheme: C

More questions on Firms

20 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

Mark scheme: D

More questions on Monetary policy

21 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.

Mark scheme: B

More questions on Market structure

22 What is an external economy of scale for a firm? A agreeing to produce large quantities exclusively for a major retailer B bulk buying of raw materials C obtaining discount rates from suppliers D sharing research from other firms

Mark scheme: D

More questions on Firms’ costs, revenue and objectives

23 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

Mark scheme: C

More questions on Fiscal policy

24 An economy is said to have a high economic growth rate. What is most likely to be found when this occurs? A a decrease in inflation and a budget deficit B a decrease in the exchange rate and a fall in savings C an increase in GDP and low unemployment D an increase in inflation and a reduction in investment

Mark scheme: C

More questions on Economic growth

25 The diagram shows percentage employment in different sectors in two countries. country X country Y 70 70 60 60 50 50 percentage 40 percentage 40 employed employed 30 30 20 20 10 10 0 0 primary secondary services primary secondary services Which statement is correct when comparing country X and country Y? A Country X produces more primary output than country Y. B Country X employs more workers in secondary industry than country Y. C Country Y produces more secondary output than country X. D Country Y is more developed than country X.

Mark scheme: D

More questions on Differences in economic development between countries

26 Official statistics in 2010 showed South Africa had a very high unemployment rate at around 25%, yet wages were still double those in Brazil. What might be a reason for South Africa’s high wages in a time of unemployment compared with Brazil? A a skilled workforce in Brazil B high levels of savings in South Africa C increased use of labour-intensive production in Brazil D strong trade unions in South Africa

Mark scheme: D

More questions on Trade unions

27 Which changes usually result when a country develops and is able to provide free health care and good living conditions? worker birth rate death rate productivity A falls falls rises B falls rises falls C rises falls falls D rises rises rises

Mark scheme: A

More questions on Population

28 What is not likely to be used to measure the difference in the standard of living between countries? A Gross Domestic Product per head B Human Development Index C the rate of poverty D the rate of interest

Mark scheme: D

More questions on Living standards

29 How does a tariff differ from a quota? A A tariff is on exports, a quota is on imports. B A tariff is on the quantity of an import, a quota is on the price of an import. C A tariff raises government revenue, a quota raises no government revenue. D A tariff raises the price at which imports sell, a quota does not.

Mark scheme: C

More questions on Globalisation, free trade and protection

30 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

Mark scheme: B

More questions on Current account of balance of payments