Cambridge IGCSE Economics 0455 — 2018 May/June Paper 1 · Variant 3
0455/13/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 · The introduction of robots has meant that many firms now require fewer workers to produce…
1 The introduction of robots has meant that many firms now require fewer workers to produce their goods and services. According to this statement, which factor of production is replacing workers? A capital B enterprise C labour D land
Mark scheme: A
Q2 · Economics textbooks identify the existence of scarcity as the basic economic problem
2 Economics textbooks identify the existence of scarcity as the basic economic problem. What is it that makes scarcity a problem? A It can cause inflation and unemployment. B It is impossible to satisfy unlimited wants. C It is the first priority of governments. D It only affects the richest countries.
Mark scheme: B
Q3 · The diagram shows a country’s original production possibility curve XX
3 The diagram shows a country’s original production possibility curve XX. X manufactured goods O X Y agricultural goods What could cause the country’s production possibility curve to move from XX to XY? A a decrease in the price of manufactured goods B a major war C an improvement in fertilisers D an increase in the employment rate
Mark scheme: C
More questions on Production possibility curve (PPC) diagrams
Q4 · What is a benefit of the free market system?
4 What is a benefit of the free market system? A Innovation is encouraged to increase profits. C Negative externalities can be controlled. B Subsidies can be used to encourage exports. D The distribution of goods and services is fair.
Mark scheme: A
Q5 · The diagram shows the demand curve D1 and supply curve S1 for healthcare in an economy
5 The diagram shows the demand curve D1 and supply curve S1 for healthcare in an economy. The original equilibrium is X. What will be the new equilibrium if the economy experiences sustained economic growth and the government reduces planning controls on the building of new hospitals? S2 price S1 S3 A D B X C D2 D1 D3 O quantity
Mark scheme: B
Q6 · A private firm is one of a few suppliers of electricity in an economy
6 A private firm is one of a few suppliers of electricity in an economy. It is fined by the government for pollution from its coal-fired power stations which affect the health of those living nearby. What does this situation involve? A a government policy of nationalising an electricity supplier B a market structure for electricity that is perfect competition C a monopoly electricity supplier that ignores government controls D external costs that are the result of electricity production
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 is not a function of a central bank?
8 What is not a function of a central bank? A It is the lender of last resort to financial institutions. B It is the sole issuer of notes and coins. C It lends to individual firms and consumers. D It manages the national debt for the government.
Mark scheme: C
Q9 · Which change will make a manufacturing company replace labour with capital to maintain…
9 Which change will make a manufacturing company replace labour with capital to maintain the most efficient combination of factors of production? A The price of machinery has increased. B The productivity of labour has increased. C The productivity of machinery has increased. D The supply of labour has increased.
Mark scheme: C
Q10 · What is the most likely reason a firm might welcome the introduction of a trade union for…
10 What is the most likely reason a firm might welcome the introduction of a trade union for its workers? A Unions advise on the level of company dividends. B Unions press for higher minimum wage rates. C Unions simplify the process of wage bargaining. D Unions wish to operate labour-intensive production methods.
Mark scheme: C
Q11 · What is least likely to lead to an increase in consumer spending on a new car?
11 What is least likely to lead to an increase in consumer spending on a new car? A a decrease in the cost of car repairs B a decrease in the price of petrol C a decrease in the rate of interest D a decrease in train fares
Mark scheme: D
Q12 · What is a characteristic of perfect competition?
12 What is a characteristic of perfect competition? A Firms sell an identical product. B New firms cannot enter the market. C The market is controlled by one firm. D There is a high degree of market concentration.
Mark scheme: A
Q13 · A television manufacturer claims to have the most technically advanced production in the…
13 A television manufacturer claims to have the most technically advanced production in the industry. What is this most likely to mean when compared with its rival producers? A It has a greater share of the television market. B It is a more diversified company. C It is less likely to be disrupted by strike action. D It needs a more highly skilled workforce.
Mark scheme: D
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 · In many countries the government provides financial help to firms who wish to produce…
16 In many countries the government provides financial help to firms who wish to produce electricity using wind turbines. Which kind of policy measure is this? A deregulation B maximum price C subsidy D taxation
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 seeks to redistribute income from the rich to the poor
18 A government seeks to redistribute income from the rich to the poor. Which combination of policy measures is most likely to achieve this aim? income tax sales tax state benefit A decrease decrease decrease B decrease increase increase C increase decrease increase D increase increase decrease
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 · What is a likely consequence of economic growth?
20 What is a likely consequence of economic growth? A decreased levels of employment B decreased levels of exports C decreased levels of output D decreased levels of poverty
Mark scheme: D
Q21 · A basket of goods is used to calculate a country’s rate of inflation
21 A basket of goods is used to calculate a country’s rate of inflation. What is included in the basket of goods? A a representative sample of current household spending B all goods bought in the country C the spending on an unchanging group of necessities D the 50 most popular items of household spending
Mark scheme: A
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 · Provision of services in rural districts of developing countries tends to occur later…
24 Provision of services in rural districts of developing countries tends to occur later than those in urban areas. For which service would this not be correct? A medical research units B mobile phone networks C modern transport systems D university teaching departments
Mark scheme: B
More questions on Differences in economic development between countries
Q25 · The table shows a country’s past and predicted age structure, as a percentage (%), from…
25 The table shows a country’s past and predicted age structure, as a percentage (%), from 2000 to 2150. The working age range is 15 – 64. 2000 2050 2100 2150 age % % % % 65 and over 7 14 25 28 15 – 64 63 68 60 56 14 and under 30 18 15 16 Which statement describes the behaviour of the dependency ratio over the period? A It falls and then rises. B It falls continuously. C It rises and then falls. D It rises continuously.
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
Q27 · What would have the most severe restriction on the volume of international trade in steel?
27 What would have the most severe restriction on the volume of international trade in steel? A an embargo B a licence system C a quota D a tariff
Mark scheme: A
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 · The table refers to a country’s balance of payments on current account
29 The table refers to a country’s balance of payments on current account. $bn goods exports 100 goods imports 125 services exports 60 services imports 50 income and transfers balance +10 What can be concluded from the table? A a current account deficit of $5bn B a current account surplus of $5bn C a goods and services deficit of $35bn D a goods and services surplus of $15bn
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.
2Economic growth2Firms and production2Firms’ costs, revenue and objectives2Living standards2Market failure2The factors of production2Demand1Differences in economic development between countries1Fiscal policy1Globalisation, free trade and protection1Inflation and deflation1Market economic system1Market structure1Money and banking1Population1Price changes1Price elasticity of supply (PES)1Production possibility curve (PPC) diagrams1The macroeconomic aims of government1The nature of the economic problem1The role of government1Trade unions1What you needed in this session
Cambridge’s own grade thresholds for 2018 May/June, Paper 1 · Variant 3. A higher threshold means an easier paper — the bar moves with how the cohort did.