Cambridge IGCSE Economics 0455 — 2018 May/June Paper 1 · Variant 2
0455/12/M/J/18 · 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 · In economics, natural sunlight is classified as a free good
1 In economics, natural sunlight is classified as a free good. What is the reason for this? A Sunlight is a gift of nature. B Sunlight is a renewable resource. C There is no opportunity cost of using sunlight. D Unlimited amounts of sunlight can be consumed.
Mark scheme: C
Q2 · What would be classified as the factor of production capital for an airline?
2 What would be classified as the factor of production capital for an airline? A the aircraft operated by the airline B the money the airline keeps in the bank C the pilots the airline uses D the shares of the airline quoted on the stock market
Mark scheme: A
Q3 · The diagram shows a production possibility curve (PPC)
3 The diagram shows a production possibility curve (PPC). Which position is most likely to lead to the greatest outward shift of the PPC? consumer goods B A C D O capital goods
Mark scheme: D
More questions on Production possibility curve (PPC) diagrams
Q4 · What is a major advantage of a market economic system over a mixed economic system?
4 What is a major advantage of a market economic system over a mixed economic system? A All production of goods and services is determined by consumer demand. B Ownership of resources is divided between private and public sectors. C Producers include any external costs they create in the price of the good. D There will always be an even distribution of income and wealth.
Mark scheme: A
Q5 · The diagram shows the market for beef in the US with the original equilibrium at X
5 The diagram shows the market for beef in the US with the original equilibrium at X. What will be the new equilibrium position if incomes in the US rise? S3 price S1 S2 B C X A D D2 D1 D3 O quantity
Mark scheme: C
Q6 · The table shows government estimates of the private and external benefits and costs of…
6 The table shows government estimates of the private and external benefits and costs of building a new dam. $ million private benefits 250 external benefits 325 private costs 200 external costs 150 What is the difference between the social benefits and social costs of building the dam? A $25 million B $50 million C $175 million D $225 million
Mark scheme: D
Q7 · The diagram shows the supply curve for a good
7 The diagram shows the supply curve for a good. S price ($) 4 2 0 10 20 30 quantity (units) What is the price elasticity of supply when the price rises from $2 to $4? A 0.2 B 0.5 C 1 D 2
Mark scheme: B
Q8 · What does a commercial bank not provide?
8 What does a commercial bank not provide? A cash B bonds C loans D mortgages
Mark scheme: B
Q9 · What will be likely to increase the wages of airline pilots?
9 What will be likely to increase the wages of airline pilots? A Incomes increase in the world’s major economies. B Terrorist attacks decrease tourist travel. C The cost of aviation fuel rises. D The world economy goes into recession.
Mark scheme: A
Q10 · What is most likely to help a trade union’s claim for wage increases in an industry?
10 What is most likely to help a trade union’s claim for wage increases in an industry? A a decrease in the price of a close substitute for the product B a decrease in the qualifications needed for the job C an increase in the number of workers D an increase in the profits of the industry
Mark scheme: D
Q11 · The table shows some information for a computer engineer in 2015
11 The table shows some information for a computer engineer in 2015. $ salary 40 000 fees earned from consultancy 15 000 credit card repayment 5 000 Income tax is fixed at 20%. The engineer saved 10% of the disposable income. How much was saved? A $3200 B $4000 C $4400 D $5500
Mark scheme: C
Q12 · What is a characteristic of a perfectly competitive firm?
12 What is a characteristic of a perfectly competitive firm? A absence of competitors B non-price competition C one dominant firm D price taker
Mark scheme: D
Q13 · What is a possible cause of diseconomies of scale?
13 What is a possible cause of diseconomies of scale? A an increase in extra administration B an increase in raw materials costs C an increase in taxation on company profits D an increase in the national minimum wage
Mark scheme: A
Q14 · A firm that sells its product for $6 a unit has the following total costs
14 A firm that sells its product for $6 a unit has the following total costs. output (units) 0 10 20 30 total costs ($) 40 100 120 150 Which statement is correct? A Average cost is lowest when 10 units are produced. B The firm does not make any profit when 20 units are sold. C The firm has no fixed costs. D Total variable costs fall continuously over these outputs.
Mark scheme: B
Q15 · Which statement about fixed costs is correct?
15 Which statement about fixed costs is correct? A They exist only in the long run. B They include raw material and direct labour costs. C They increase at the same rate as output. D They must be paid even if there is no output.
Mark scheme: D
Q16 · Which is a supply-side policy?
16 Which is a supply-side policy? A increasing interest rates B increasing taxation C providing training courses D selling government bonds
Mark scheme: C
Q17 · What is an aim of government policy?
17 What is an aim of government policy? A income tax B interest rates C stable prices D unemployment
Mark scheme: C
Q18 · A government has the following revenue
18 A government has the following revenue. revenue ($ m) corporation profits tax 20 inheritance tax 30 duty on imports 40 income tax 50 sales tax (VAT) 200 What is the total amount of indirect tax revenue? A $140 m B $200 m C $240 m D $270 m
Mark scheme: C
Q19 · Which situation involving the building industry is most likely to be investigated by a…
19 Which situation involving the building industry is most likely to be investigated by a government body set up to control restrictive practices? A a builder purchasing a plot of land for development of housing B groups of suppliers of building materials agreeing to fix prices C several builders bidding for the same contracts D several builders using different sources of supply
Mark scheme: B
Q20 · The table shows the change in Gross Domestic Product (GDP) of four countries
20 The table shows the change in Gross Domestic Product (GDP) of four countries. Which country has experienced a recession? quarterly percentage change in GDP Q1 Q2 Q3 Q4 % % % % A – 6.0 1.0 – 2.0 1.0 B 0.0 –1.0 0.0 – 0.1 C 0.1 0.1 0.1 – 3.0 D 1.0 1.0 – 0.5 – 0.5
Mark scheme: D
Q21 · What determines the weights in the consumer prices index (CPI)?
21 What determines the weights in the consumer prices index (CPI)? A the average income received by the various households B the average increase in the prices of the different goods C the proportion of income spent by the average household on particular goods D the proportion of income that the average household saves
Mark scheme: C
Q22 · There was a fall in investment spending by businesses in the third quarter of 2015
22 There was a fall in investment spending by businesses in the third quarter of 2015. What would be the likely result of this? A an increase in economic growth B an increase in exports C an increase in incomes D an increase in unemployment
Mark scheme: D
Q23 · The table shows units of output, value of output and number of people employed in an…
23 The table shows units of output, value of output and number of people employed in an industry over three years. output output value number employed (units, millions) ($ millions) (000) year 1 10 10 5 year 2 21 25 7 year 3 32 40 8 What can be concluded from the table? A Inflation has increased. B Productivity has increased. C Profit has increased. D Working population has increased.
Mark scheme: B
Q24 · Which feature is found in a developed country rather than a developing country?
24 Which feature is found in a developed country rather than a developing country? A high levels of rural to urban migration B highly organised international financial markets C low proportion of workforce in service industries D low school-leaving age
Mark scheme: B
More questions on Differences in economic development between countries
Q25 · Over two-thirds of the world’s poorest people live in rural areas
25 Over two-thirds of the world’s poorest people live in rural areas. They are mainly involved in subsistence agriculture. What explains why poverty remains at a high level for subsistence farming families? A a lack of finance to buy machinery to improve productivity B low international prices for food due to overproduction C the size of families is too small to work the land D women are discouraged from doing agricultural work
Mark scheme: A
Q26 · The government of a developing country allows a multinational mining company to mine…
26 The government of a developing country allows a multinational mining company to mine minerals in order to improve the standard of living of the local people. Which action by the multinational company (MNC) will not lead to an improvement in the standard of living of the local people? A building roads to assist transport B exporting mineral ore C providing skills training D returning profits overseas
Mark scheme: D
More questions on Differences in economic development between countries
Q27 · A country wishes to follow a policy of trade protection
27 A country wishes to follow a policy of trade protection. Which action would it take? A increase the level of import quotas B reduce import tariffs C remove exchange controls D subsidise export producers
Mark scheme: D
Q28 · In 2012 the UK held the Olympic Games, which attracted a large number of visitors from…
28 In 2012 the UK held the Olympic Games, which attracted a large number of visitors from foreign countries. Which item of the UK’s current account balance will have benefited directly from this event? A export trade in goods B export trade in services C import trade in goods D import trade in services
Mark scheme: B
Q29 · In 2015, the value of the South African currency (the rand) depreciated against the US…
29 In 2015, the value of the South African currency (the rand) depreciated against the US dollar. What effect did this have on the US economy? A Exports to South Africa became more expensive. B The current account deficit of the US decreased. C The US experienced higher levels of inflation. D Unemployment in the US decreased.
Mark scheme: A
Q30 · The table shows the rice yield in four countries
30 The table shows the rice yield in four countries. rice yield country (kilos per hectare) Japan 64 China 53 Bangladesh 20 Thailand 20 What may be concluded from this information? A Bangladesh and Thailand produce the same amount of rice. B Japan produces more than three times as much rice as Bangladesh. C Japan produces the largest amount of rice per hectare. D Japan produces the largest amount of rice per person employed.
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 countries2Economic growth2Market failure2Current account of balance of payments1Demand1Firms and production1Fiscal policy1Foreign exchange rates1Globalisation, free trade and protection1Households1Inflation and deflation1Living standards1Market economic system1Market structure1Money and banking1Opportunity cost1Poverty1Price elasticity of supply (PES)1Production possibility curve (PPC) diagrams1Supply-side policy1The factors of production1The macroeconomic aims of government1Trade unions1Workers1What you needed in this session
Cambridge’s own grade thresholds for 2018 May/June, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.