Cambridge IGCSE Economics 0455 — 2014 May/June Paper 1 · Variant 2
0455/12/M/J/14 · 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 · What is the cause of economic scarcity?
1 What is the cause of economic scarcity? A limited wants with limited resources B limited wants with unlimited resources C unlimited wants with limited resources D unlimited wants with unlimited resources
Mark scheme: C
Q2 · How is an immediate effect of an increase in unemployment illustrated on a production…
2 How is an immediate effect of an increase in unemployment illustrated on a production possibility curve diagram? A a movement of the production point closer to the curve B a movement of the production point further inside the curve C a shift of the production possibility curve inwards D a shift of the production possibility curve outwards
Mark scheme: B
More questions on Production possibility curve (PPC) diagrams
Q3 · What is a factor of production?
3 What is a factor of production? A a semi-skilled, young worker B direct taxes received by a government C shares in a manufacturing company D stocks of money held a bank
Mark scheme: A
Q4 · A supply curve shows the link between the quantity supplied and A demand
4 A supply curve shows the link between the quantity supplied and A demand. B equilibrium output. C the price of the product. D the scale of production.
Mark scheme: C
Q5 · Which headline could apply to a mixed economy but not a free market economy?
5 Which headline could apply to a mixed economy but not a free market economy? A ‘Cheap imports put domestic producers out of business.’ B ‘Local government planning decision angers residents.’ C ‘Many fish die as a company pollutes a river with waste material.’ D ‘Small shops close as large supermarkets open in the area.’
Mark scheme: B
Q6 · In 2012 the local government of a city decided to increase parking charges for motorists
6 In 2012 the local government of a city decided to increase parking charges for motorists. It was intended to raise money to correct a deficit in the local government’s budget. The local government said if they did not increase charges they would not be able to provide all their current services. Businesses complained about the likely loss of revenue if parking charges were increased. Which concepts does this statement involve? A inflation and the private sector B opportunity cost and public expenditure C private benefit and the free market D unlimited resources and a centrally planned economy
Mark scheme: B
Q7 · In 2011 the US Government declared that the country must increase the manufacture of fuel…
7 In 2011 the US Government declared that the country must increase the manufacture of fuel from crops such as corn that have previously only been used for food. What is likely to happen in the market for corn? A a movement along the demand curve for corn B a movement along the supply curve for corn C a shift to the left in the demand curve for corn D a shift to the left in the supply curve for corn
Mark scheme: B
Q8 · What may cause an individual to save a higher proportion of their income?
8 What may cause an individual to save a higher proportion of their income? A a belief that the price of goods will rise in the future B a fall in the rate of interest paid by the country’s banks C a fear that income will fall in the future D a rise in the individual’s wish to enjoy higher consumption immediately
Mark scheme: C
Q9 · In a particular industry, male workers on average are paid more than female workers
9 In a particular industry, male workers on average are paid more than female workers. What might explain this? A Female workers are less likely to take time off work. B Female workers are more likely to be in trade unions. C Male workers have higher qualifications. D Male workers live nearer to their place of work.
Mark scheme: C
Q10 · In South Africa, the rate of consumer spending is relatively high compared with other…
10 In South Africa, the rate of consumer spending is relatively high compared with other developing countries. However, the unemployment rate is high at 25% and only 27% of students complete the 12 years of basic education. As a result, what is also likely to be found in South Africa? A a high average standard of living B a high current rate of savings C a high level of debt among consumers D a high supply of skilled workers
Mark scheme: C
Q11 · A trade union is negotiating a wage rise for its members
11 A trade union is negotiating a wage rise for its members. What will increase the chance of the wage rise being granted? A The company’s product has many substitutes. B The economy is entering a period of recession. C The government has made strike action illegal. D Wages are a small part of the company’s costs.
Mark scheme: D
Q12 · When a shoe manufacturer doubles all factors of production output more than doubles
12 When a shoe manufacturer doubles all factors of production output more than doubles. Which economic concept does this illustrate? A diseconomies of scale B economies of scale C increasing profits D opportunity cost
Mark scheme: B
Q13 · Which market conditions apply to firms that operate in perfect competition and which to a…
13 Which market conditions apply to firms that operate in perfect competition and which to a monopoly? perfect competition monopoly A demand influenced by advertising demand not influenced by advertising B many barriers to entry no barriers to entry C no influence on price strong influence on price D sales of branded products sales of unique products
Mark scheme: C
Q14 · The diagram shows the fixed costs, variable costs and total costs of a firm
14 The diagram shows the fixed costs, variable costs and total costs of a firm. P Q costs R O S output Which distance represents the firm’s fixed costs? A PS B QR C QS D RS
Mark scheme: D
Q15 · When it produces 100 units, a firm’s total variable cost is $300 and its total fixed cost…
15 When it produces 100 units, a firm’s total variable cost is $300 and its total fixed cost is $2700. What is the average cost? A $3 B $24 C $27 D $30
Mark scheme: D
Q16 · Which policy is an example of an expansionary monetary policy?
16 Which policy is an example of an expansionary monetary policy? A lower interest rates B lower money supply growth C lower public sector spending D lower taxation
Mark scheme: A
Q17 · What is not a public sector expenditure?
17 What is not a public sector expenditure? A claims paid on travel insurance for cancelled flights B collections of rubbish by a local council to meet regulations on recycling waste C grants from central funds to compensate people whose property has been damaged by storms D the establishment of a national database to assist the police in finding criminals
Mark scheme: A
Q18 · Which pair of government actions combines a fiscal policy with a supply-side policy?
18 Which pair of government actions combines a fiscal policy with a supply-side policy? A changing government spending with changing interest rates B cutting tax rates with providing information on job vacancies C limiting bank lending with the privatisation of industry D restricting credit with less control over labour markets
Mark scheme: B
Q19 · A government collects the following revenue in a year
19 A government collects the following revenue in a year. $m taxes on goods 30 taxes on income 500 taxes on services 20 customs and excise duties 50 What is the amount of indirect tax revenue? A $30 m B $70 m C $100 m D $500 m
Mark scheme: C
Q20 · Which type of unemployment occurs when the total demand for goods and services in the…
20 Which type of unemployment occurs when the total demand for goods and services in the economy falls? A cyclical B frictional C seasonal D structural
Mark scheme: A
Q21 · Why is the Human Development Index (HDI) often considered to be better than GDP per head…
21 Why is the Human Development Index (HDI) often considered to be better than GDP per head as a measure of living standards? A GDP per head excludes economic growth. B GDP per head ignores population growth. C HDI includes more than the production of goods and services. D HDI is calculated by the national government.
Mark scheme: C
Q22 · In 2013 there was a period of low interest rates and high inflation in an economy
22 In 2013 there was a period of low interest rates and high inflation in an economy. Who would be most likely to benefit and who most likely to lose during such a period? benefit lose A borrowers savers B consumers on fixed incomes firms wishing to invest C credit card companies sellers of luxury goods D exporters banks
Mark scheme: A
Q23 · In which case is success for the government in achieving the first aim likely to cause…
23 In which case is success for the government in achieving the first aim likely to cause problems in achieving the second? first aim second aim A full employment price stability B high economic growth full employment C price stability stable balance of payments D stable balance of payments more even distribution of income
Mark scheme: A
Q24 · Which combination of influences must have occurred for a population to be falling when…
24 Which combination of influences must have occurred for a population to be falling when there is no migration? birth rate death rate fertility rate A falling falling falling B falling rising falling C falling rising rising D rising falling falling
Mark scheme: B
Q25 · Developing countries often wish to prevent the population in rural areas moving to the…
25 Developing countries often wish to prevent the population in rural areas moving to the towns. Investment grants are given to companies if they set up their businesses in rural areas. What is this policy intended to achieve? A decreased transport costs B decreased external cost C increased economies of scale D increased use of labour
Mark scheme: D
More questions on Differences in economic development between countries
Q26 · Increasing numbers of qualified medical workers from developing economies migrate to…
26 Increasing numbers of qualified medical workers from developing economies migrate to developed economies. What explains this migration? A There are better working conditions in hospitals and clinics in developed economies. B There are fewer patients requiring medical treatment in developing countries. C There is a lack of training opportunities for medical staff in developed economies. D There is an oversupply of qualified medical workers in developing countries.
Mark scheme: A
More questions on Differences in economic development between countries
Q27 · The table gives information about four countries
27 The table gives information about four countries. Which country has the lowest standard of living? life % of labour GDP per head force in expectancy (US $) agriculture A 48 120 80 B 48 250 70 C 54 350 75 D 60 380 60
Mark scheme: A
Q28 · The citizens of a country which avoids international trade may benefit from A an increase…
28 The citizens of a country which avoids international trade may benefit from A an increase in specialisation. B better political and cultural ties. C competitive pressure to improve the quality of goods. D more employment in their industries.
Mark scheme: D
Q29 · In 2012, Nokia, a mobile phone manufacturer, produced 18% of Finland’s exports
29 In 2012, Nokia, a mobile phone manufacturer, produced 18% of Finland’s exports. Why might this be undesirable for Finland? A Foreign demand for mobile phone firms may grow continuously. B Nokia may introduce new technology which raises total costs by less than output. C There may be a reduction in trade restrictions on mobile phones. D There may be an industrial dispute at Nokia.
Mark scheme: D
Q30 · The table shows the values of the items in a country’s current account in two years
30 The table shows the values of the items in a country’s current account in two years. year 1 year 2 item ($m) ($m) balance of goods and services –30 0 net income –30 –20 net transfers ? ? balance of current account –50 +10 How did the value of the net transfers change between year 1 and year 2? A decreased by $10m B decreased by $20m C increased by $20m D increased by $30m
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.
3Differences in economic development between countries2Firms’ costs, revenue and objectives2Fiscal policy2International specialisation2Supply2Current account of balance of payments1Employment and unemployment1Firms and production1Households1Inflation and deflation1Market structure1Mixed economic system1Monetary policy1Opportunity cost1Population1Production possibility curve (PPC) diagrams1The factors of production1The macroeconomic aims of government1The nature of the economic problem1The role of government1Trade unions1Workers1What you needed in this session
Cambridge’s own grade thresholds for 2014 May/June, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.