Cambridge IGCSE Economics 0455 — 2017 Oct/Nov Paper 1 · Variant 3
0455/13/O/N/17 · 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 scheme3 pages
Answers below. Sit the paper first if you are practising.
Questions as text
Q1 · What does an economist mean by the factor of production called capital?
1 What does an economist mean by the factor of production called capital? A goods that can be used to produce other goods B money used to start a business C resources that cannot be replaced D the profits of a company
Mark scheme: A
Q2 · A government decides to spend more on defence and cannot spend money on a new airport
2 A government decides to spend more on defence and cannot spend money on a new airport. Which concepts can be applied to the above statement? A budget surplus; external cost B factor of production; private monopoly C public sector; opportunity cost D trade surplus; budget deficit
Mark scheme: C
Q3 · The diagram shows a production possibility curve diagram
3 The diagram shows a production possibility curve diagram. A country’s initial position is X. services R X T S O manufacturing Better manufacturing processes are introduced and the country improves its tourist facilities. What would represent this? A S to T B T to R C X to R D X to T
Mark scheme: C
More questions on Production possibility curve (PPC) diagrams
Q4 · What might be an external cost of drinking alcohol?
4 What might be an external cost of drinking alcohol? A the cost of a bottle of wine B the risk of illness from drinking alcohol C the risk of street violence D the tax paid to the government
Mark scheme: C
Q5 · What is a benefit of the market system?
5 What is a benefit of the market system? A Competition ensures choice for consumers. B Prices equal supply costs. C Unemployment is kept to a minimum. D Wage differentials are small.
Mark scheme: A
Q6 · The table illustrates the demand and supply for coffee in a market in Africa
6 The table illustrates the demand and supply for coffee in a market in Africa. price per kg quantity demanded quantity supplied ($) (kg) (kg) 10 50 10 20 40 20 30 30 30 40 20 40 50 10 50 When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee? A 0.2 B 0.5 C 2.0 D 5.0
Mark scheme: B
Q7 · In recent years the price of crude oil on the world market has fallen dramatically
7 In recent years the price of crude oil on the world market has fallen dramatically. One cause has been the increase in oil obtained by the new extraction process of fracking. How is this shown on a demand and supply diagram of the market for crude oil? A a shift in the demand curve to the left B a shift in the demand curve to the right C a shift in the supply curve to the left D a shift in the supply curve to the right
Mark scheme: D
Q8 · What is the best example of specialisation?
8 What is the best example of specialisation? A a diversified engineering company B a general repairs handyman C a self-sufficient, non-trading country D an old person’s helper and care assistant
Mark scheme: D
Q9 · Which workers are most likely to gain the highest increase in wages from a pay rise of 2%?
9 Which workers are most likely to gain the highest increase in wages from a pay rise of 2%? A airline pilots B farm workers C nurses D shop assistants
Mark scheme: A
Q10 · A female accountant in a private firm earns $80 per hour; a male Professor of Finance in…
10 A female accountant in a private firm earns $80 per hour; a male Professor of Finance in a government university earns $40 per hour. Each works the same number of hours. What could explain the difference in earnings? A It is difficult to measure the output per hour in each profession. B Pay in the private sector is profit-related but is not in the public sector. C Qualifications of accountants are lower than those of Professors of Finance. D Women are generally given preference over men in professional jobs.
Mark scheme: B
Q11 · Each of the four sets of descriptions in the table refers to a person applying for a job
11 Each of the four sets of descriptions in the table refers to a person applying for a job. Which person is likely to receive higher pay? A skilled experienced younger worker B skilled inexperienced older worker C unskilled experienced older worker D unskilled inexperienced younger worker
Mark scheme: A
Q12 · Which is an internal diseconomy of scale?
12 Which is an internal diseconomy of scale? A a lack of communication in a firm B a reduction of cost by buying in bulk C a shortage of skilled labour in an area D traffic congestion in a particular area
Mark scheme: A
Q13 · Private multinational clothing companies operate in developing countries to reduce their…
13 Private multinational clothing companies operate in developing countries to reduce their average costs of production. Which feature of developing countries attracts them for this purpose? A In developing countries, clothing workers receive low wages. B In developing countries, foreign managers are allowed to pay no income tax. C In developing countries, multinationals are allowed to take profits out of the country. D In developing countries, there is a large market for fashion clothing.
Mark scheme: A
Q14 · A major computer company announced that its profits had fallen below the level predicted
14 A major computer company announced that its profits had fallen below the level predicted. What might have caused this? A increased advertising costs that greatly improved sales B low prices that made the company’s product competitive C new technology that reduced costs D reduced sales and low prices
Mark scheme: D
Q15 · An entrepreneur buys a workshop for $10 000 to make picture frames
15 An entrepreneur buys a workshop for $10 000 to make picture frames. In the first year he spent $40 000 on materials and employed two workers. He paid the workers for each frame produced with a total cost of $30 000. He bought a vehicle to deliver the frames for $10 000. What were his total variable costs? A $40 000 B $70 000 C $80 000 D $100 000
Mark scheme: B
Q16 · What, when increased, will help a government to reduce the rate of inflation?
16 What, when increased, will help a government to reduce the rate of inflation? A budget deficit B consumer spending C income tax D pensions
Mark scheme: C
Q17 · Which policy is most likely to increase the level of economic activity?
17 Which policy is most likely to increase the level of economic activity? A increasing the exchange rate B increasing the rate of interest C reducing government spending D reducing the general tax level
Mark scheme: D
Q18 · The graph shows the percentage of income paid in taxation
18 The graph shows the percentage of income paid in taxation. Which line represents a proportional tax? A % income B paid in taxation C D O income
Mark scheme: D
Q19 · A government collects the following revenue in a year
19 A government collects the following revenue in a year. $m customs duties 100 taxes on goods 200 taxes on income 400 taxes on services 300 What is the amount of indirect tax revenue? A $200 m B $400 m C $500 m D $600 m
Mark scheme: D
Q20 · Why is the Human Development Index (HDI) often considered to be better than Gross…
20 Why is the Human Development Index (HDI) often considered to be better than Gross Domestic Product (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
Q21 · What may cause an immediate increase in the working population?
21 What may cause an immediate increase in the working population? A a higher birth rate B a higher death rate C a higher fertility rate D a higher rate of net immigration
Mark scheme: D
Q22 · The diagrams show percentage employment in different sectors in two countries
22 The diagrams show percentage employment in different sectors in two countries. country X country Y percentage 70 percentage 70 employed employed 60 60 50 50 40 40 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 employs more workers in secondary industry than country Y. B Country X produces more primary output than country Y. C Country Y is more developed than country X. D Country Y produces more secondary output than country X.
Mark scheme: C
More questions on Differences in economic development between countries
Q23 · What is likely to fall when the rate of unemployment falls?
23 What is likely to fall when the rate of unemployment falls? A business confidence B consumer spending C government revenue D government welfare payments
Mark scheme: D
Q24 · The birth rate and death rate in a country are the same
24 The birth rate and death rate in a country are the same. What is likely to happen if there is a decrease in the birth rate, while the death rate and migration remain the same? A population structure will remain the same B population will decrease C the standard of living will decrease D the working population will increase
Mark scheme: B
Q25 · The charts show the population structure of a country in 1960 and 2015
25 The charts show the population structure of a country in 1960 and 2015. 1960 2015 male age female male age 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 What decreased between 1960 and 2015? A average age B number of people below 15 C number of people over 60 D total population
Mark scheme: B
Q26 · The table shows the Consumer Prices Index (CPI) for selected cities for August 2015…
26 The table shows the Consumer Prices Index (CPI) for selected cities for August 2015 relative to New York, USA at 100. city CPI Geneva, Switzerland 137 Oslo, Norway 105 Sydney, Australia 89 Singapore 88 Istanbul, Turkey 48 Johannesburg, South Africa 48 Lima, Peru 44 What can be concluded from the table? A Geneva had the highest average price level. B Living standards were highest in Lima. C Singapore was more expensive than Oslo. D The annual rate of inflation was the same in Istanbul and Johannesburg.
Mark scheme: A
Q27 · What is a benefit of tariffs?
27 What is a benefit of tariffs? A increased choice B increased government revenue C more competition D more trade
Mark scheme: B
Q28 · What is an increase in the value of an exchange rate of a currency in a floating system…
28 What is an increase in the value of an exchange rate of a currency in a floating system called? A appreciation B depreciation C devaluation D revaluation
Mark scheme: A
Q29 · A developing economy has a surplus on its trade in goods of $75 billion and a deficit on…
29 A developing economy has a surplus on its trade in goods of $75 billion and a deficit on its trade in services of $25 billion, while its current account is in overall balance. Which values for net income (primary income) and net transfers (secondary income) result in the current account being in balance? net income net transfers A deficit of $20 billion surplus of $120 billion B deficit of $30 billion deficit of $70 billion C surplus of $35 billion surplus of $15 billion D surplus of $40 billion deficit of $90 billion
Mark scheme: D
Q30 · What policy would encourage greater international specialisation?
30 What policy would encourage greater international specialisation? A the promotion of industrial diversification B the protection of new businesses C the reduction of tariffs D the subsidising of service industries
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.
4Firms’ costs, revenue and objectives3Population3Workers3Globalisation, free trade and protection2Current account of balance of payments1Differences in economic development between countries1Employment and unemployment1Firms1Foreign exchange rates1Inflation and deflation1International specialisation1Living standards1Market economic system1Market failure1Opportunity cost1Price elasticity of demand (PED)1Production possibility curve (PPC) diagrams1Supply1The factors of production1What you needed in this session
Cambridge’s own grade thresholds for 2017 Oct/Nov, Paper 1 · Variant 3. A higher threshold means an easier paper — the bar moves with how the cohort did.