Cambridge IGCSE Economics 0455 — 2018 Oct/Nov Paper 1 · Variant 3

Question 1

1 Which example of a factor of production in the fishing industry is correct? factor example A capital charges on loan for fishing boat B enterprise salaries of fish warehouse managers C labour profits of fish shop owners D land fish in the sea

Accepted Answer

D

Question 2

2 Hospital services are provided by the government and paid for through taxation. People cannot always get the treatment they require because of long waiting lists. Of what is this an example? A external cost B market system C perfectly inelastic supply D scarcity

Accepted Answer

D

Question 3

3 The diagram shows a production possibility curve (PPC) for an economy. output of R W Z Y X O output of S Which change on the diagram could represent an increase in unemployment? A W to X B W to Y C Y to X D Y to Z

Accepted Answer

B

Question 4

4 Who determines what goods and services are produced in a market economy? A consumers B employees C government D trade unions

Accepted Answer

A

Question 5

5 The diagram shows the demand for and the supply of air travel. price of S air tickets $ D2 D1 O number of passengers What could cause a shift of the demand curve from D1 to D2? A an increase in airline costs B an increase in airport taxes C an increase in incomes D an increase in worldwide terrorism

Accepted Answer

C

Question 6

6 In 2015, the world price of oil fell rapidly due to changes in the conditions of demand and supply. One change was the use of a new method of extraction called fracking. Which event would not have contributed to the fall in prices? A China’s growth slowed leading to lower oil imports. B Saudi Arabia increased the volume of its oil supplies. C UK protest groups prevented the introduction of fracking projects. D USA became more self-sufficient in oil due to fracking and reduced imports.

Accepted Answer

C

Question 7

7 The table shows the demand and supply for spices in a market in Africa. price quantity quantity per kg (US$) demanded (kg) supplied (kg) 10 50 10 20 40 20 30 30 30 40 20 40 When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED) for spices? A 0.25 B 0.5 C 1.0 D 2.0

Accepted Answer

B

Question 8

8 What is a function of a country’s stock exchange? A to act as lender of last resort to commercial banks B to provide a market for the purchase and sale of shares C to provide short-term loans for investment D to set interest rates within the country

Accepted Answer

B

Question 9

9 What might cause an increase in the earnings of a doctor in a government health service? A an increasing number of doctors graduate from university each year B an increasing number of people need health care C the government spends less on the nation’s health services D the population becomes more aware of healthy eating

Accepted Answer

B

Question 10

10 What would put a trade union in a strong bargaining position to negotiate higher wages for its members in a particular firm? A The demand for the product produced by the workers has an inelastic demand. B The economy is experiencing high unemployment. C The proportion of the firm’s workers in the union is low. D Wage costs are a high proportion of total costs for firms in the industry.

Accepted Answer

A

Question 11

11 What is most likely to encourage the immediate purchase of an expensive item such as a new car? A anticipating a fall in the rate of inflation B expecting interest rates to fall C making it easier to obtain a loan D needing to plan for unexpected emergencies

Accepted Answer

C

Question 12

12 The table shows characteristics of a market. What are the characteristics of a perfectly competitive market? number number role product of buyers of sellers of firm A identical many many price taker B identical one many price maker C similar many many price taker D unique few few price maker

Accepted Answer

A

Question 13

13 A computer chip manufacturer expands by taking over a computer chip designer. Of what is this an example? A backward vertical integration B diversifying integration C forward vertical integration D horizontal integration

Accepted Answer

A

Question 14

14 The table shows a firm’s average revenue and average cost at different levels of output. When all output is sold, which level of output gives maximum profit? output average average (units) revenue (US$) cost (US$) A 5 10 30 B 10 20 20 C 15 25 15 D 20 30 18

Accepted Answer

D

Question 15

15 Which statement about total fixed cost is correct? A It falls as output increases. B It is calculated by adding total cost and total variable cost. C It is calculated by dividing total cost by output. D It must be paid even if output is zero.

Accepted Answer

D

Question 16

16 What is most likely to be an example of a progressive tax? A customs duties on imported goods B excise duties on cigarettes C income tax D sales tax

Accepted Answer

C

Question 17

17 When is a government said to balance its budget? A when all goods and services are taxed equally B when economic growth is the same in all regions of the economy C when its total income equals its total expenditure D when total exports equal total imports

Accepted Answer

C

Question 18

18 A government aims to boost production and increase sales of steel by subsidising private producers. A subsidy equal to W – Z per tonne is paid. According to the diagram, what would be the value of sales of steel after the subsidy? price supply of steel (per tonne W supply after subsidy of steel) Z P P1 demand for steel O Q Q1 quantity (tonnes of steel) A OP × OQ B OP1 × OQ1 C WZ × OQ D WZ × OQ1

Accepted Answer

B

Question 19

19 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

Accepted Answer

A

Question 20

20 When is a recession said to occur? A Economic growth in the economy falls for at least two consecutive quarters. B Gross domestic product (GDP) falls for at least two consecutive quarters. C The current account of the balance of payment is in deficit for at least two consecutive quarters. D The government experiences a budget deficit for at least two consecutive quarters.

Accepted Answer

B

Question 21

21 Which country is suffering from the worst deflation? annual change in indicator real GDP unemployment inflation per capita rate % (US$) % % A –5 +3 –3 B –2 –2 –2 C +2 –3 +1 D +12 +10 +3

Accepted Answer

A

Question 22

22 The diagram shows the rate of unemployment and the periods of recession in a country between 1978 and 2012. 12 unemployment 10 rate % 8 key 6 recession years 4 2 0 1980 1990 2000 2010 What can be concluded from the diagram? A Each recession lasted for more than two years. B Recessions occurred at regular intervals. C The unemployment rate peaked in a recession period. D The unemployment rate rose during recession periods.

Accepted Answer

D

Question 23

23 A country experienced its usual August increase in the rate of unemployment. Unfortunately this was followed by the loss of jobs resulting from the regular downturn in global economic activity. Which types of unemployment occurred? first type of second type of unemployment unemployment (August) (global downturn) A cyclical structural B frictional seasonal C seasonal cyclical D structural frictional

Accepted Answer

C

Question 24

24 What is the most likely effect of raising the retirement age in a country? A government spending increases B net immigration increases C spending on pensions increases D working population increases

Accepted Answer

D

Question 25

25 What describes absolute and relative poverty? absolute poverty relative poverty A when there are low birth rates, high death when there are high birth rates, low death rates, and high levels of migration rates, and low levels of migration B when a person does not have enough when a person earns less than money for food, shelter, and clothes others in the same society C when everyone has an when half the population has an income below US$1.90 a day income of US$1.90 a day D when necessities cannot be afforded when luxuries cannot be afforded

Accepted Answer

B

Question 26

26 Developing countries are sometimes given aid by charities and foreign governments. Which aid programme would be least likely to lead to long-term economic growth? A the building of an irrigation system B the construction of a new airport C the distribution of gifts of food D the training of technical staff

Accepted Answer

C

Question 27

27 A government imposes a limit of 2 million on the number of smartphones imported into the country. Which term is given to this limitation? A ban B embargo C quota D tariff

Accepted Answer

C

Question 28

28 What is most likely to happen if South Korea builds a factory in Switzerland that becomes profitable? A South Korea’s imports of goods will decrease. B South Korea’s investment income will increase. C Switzerland’s trade balance in goods will worsen. D Switzerland’s trade balance in services will improve.

Accepted Answer

B

Question 29

29 In July 2015, Australia’s balance of trade with the rest of the world was –2809 billion Australian dollars. In January 2016 it was –3294 billion Australian dollars. What describes Australia’s balance of trade over this period? balance of trade trend A deficit improving B deficit worsening C surplus improving D surplus worsening

Accepted Answer

B

Question 30

30 The table shows the tariffs imposed on imported tropical fruit in the European Union (EU) according to the degree of processing. EU tariffs (% rate) fresh tropical fruit 8.0 canned tropical fruit 11.3 bottled tropical fruit drinks 23.6 What might be the reason for this pattern of tariffs? A to encourage imports of processed products into the EU B to encourage tropical countries’ exports C to help manufacturing industries in the EU D to help tropical countries develop manufacturing industries

Accepted Answer

C

Cambridge IGCSE Economics 0455 — 2018 Oct/Nov Paper 1 · Variant 3

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · Which example of a factor of production in the fishing industry is correct?

Q2 · Hospital services are provided by the government and paid for through taxation

Q3 · The diagram shows a production possibility curve (PPC) for an economy

Q4 · Who determines what goods and services are produced in a market economy?

Q5 · The diagram shows the demand for and the supply of air travel

Q6 · In 2015, the world price of oil fell rapidly due to changes in the conditions of demand…

Q7 · The table shows the demand and supply for spices in a market in Africa

Q8 · What is a function of a country’s stock exchange?

Q9 · What might cause an increase in the earnings of a doctor in a government health service?

Q10 · What would put a trade union in a strong bargaining position to negotiate higher wages…

Q11 · What is most likely to encourage the immediate purchase of an expensive item such as a…

Q12 · The table shows characteristics of a market

Q13 · A computer chip manufacturer expands by taking over a computer chip designer

Q14 · The table shows a firm’s average revenue and average cost at different levels of output

Q15 · Which statement about total fixed cost is correct?

Q16 · What is most likely to be an example of a progressive tax?

Q17 · When is a government said to balance its budget?

Q18 · A government aims to boost production and increase sales of steel by subsidising private…

Q19 · In which case is success for the government in achieving the first aim likely to cause…

Q20 · When is a recession said to occur?

Q21 · Which country is suffering from the worst deflation?

Q22 · The diagram shows the rate of unemployment and the periods of recession in a country…

Q23 · A country experienced its usual August increase in the rate of unemployment

Q24 · What is the most likely effect of raising the retirement age in a country?

Q25 · What describes absolute and relative poverty?

Q26 · Developing countries are sometimes given aid by charities and foreign governments

Q27 · A government imposes a limit of 2 million on the number of smartphones imported into the…

Q28 · What is most likely to happen if South Korea builds a factory in Switzerland that becomes…

Q29 · In July 2015, Australia’s balance of trade with the rest of the world was –2809 billion…

Q30 · The table shows the tariffs imposed on imported tropical fruit in the European Union (EU)…

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