Cambridge IGCSE Economics 0455 — 2019 May/June Paper 1 · Variant 1
0455/11/M/J/19 · 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 would an economist regard as an example of the factor of production capital?
1 What would an economist regard as an example of the factor of production capital? A an individual’s purchase of stocks and shares B borrowing by a firm to pay for electricity C the building by a firm of a new factory D total savings by individuals in a country
Mark scheme: C
Q2 · The diagram shows a production possibility curve (PPC)
2 The diagram shows a production possibility curve (PPC). goods O services Why is the curve usually drawn like this? A International free trade exists. B Opportunity cost changes. C Resources are unlimited in supply. D Some resources will be unemployed.
Mark scheme: B
More questions on Production possibility curve (PPC) diagrams
Q3 · In recent years more golf courses, which use large quantities of water, have opened in…
3 In recent years more golf courses, which use large quantities of water, have opened in China. What may be the opportunity cost of this? A cost of water B loss of farmland C sales of golf equipment D wages of golf course staff
Mark scheme: B
Q4 · Which situation indicates a mixed economy?
4 Which situation indicates a mixed economy? A Economic activity is controlled entirely by the private sector. B Individual choices are unaffected by government actions. C Services are provided by both private and public sectors. D The government carries out all planning and decision making.
Mark scheme: C
Q5 · What causes market failure?
5 What causes market failure? A government provision of services B social costs equal private costs C the existence of external benefits D the existence of perfect competition
Mark scheme: C
Q6 · A newspaper reported that ‘The world market for coffee has returned to equilibrium’
6 A newspaper reported that ‘The world market for coffee has returned to equilibrium’. Which situation supports this statement? A A sequence of poor harvests resulted in shortages. B Decreased transport costs led to a surplus of supply. C Farmers matched demand by planting more coffee bushes. D The price of coffee was fixed between producers.
Mark scheme: C
Q7 · The table shows the demand schedule for a good at different prices
7 The table shows the demand schedule for a good at different prices. price quantity $ demanded 8 200 10 160 12 120 14 60 The current market price for the good is $10. Following a 20% increase in price, what will be the change in the quantity demanded? A – 60 B – 40 C +120 D +200
Mark scheme: B
Q8 · Carlos has been offered a new job with a large multinational company
8 Carlos has been offered a new job with a large multinational company. He is undecided whether to accept the position. What is a non-wage factor he might consider? A bonus payments B holiday entitlement C overtime rate D salary level
Mark scheme: B
Q9 · Unlike the UK and US, a significant proportion of the shares on the stock exchanges of…
9 Unlike the UK and US, a significant proportion of the shares on the stock exchanges of China and Russia are of state-owned enterprises. Which judgement about China and Russia can be made from this information? A their distribution of income and wealth B their level of development C their stages of production D their type of economic system
Mark scheme: D
Q10 · What is the most important factor that affects how much a family saves?
10 What is the most important factor that affects how much a family saves? A the income of the family B the level of taxation C the rate of inflation D the reliability of banks
Mark scheme: A
Q11 · The table shows the change in real incomes for a number of occupations between 1985 and…
11 The table shows the change in real incomes for a number of occupations between 1985 and 2015. change in occupation real income % doctors 153 lawyers 114 accountants 60 bricklayers 37 bus and coach drivers 19 fork-lift truck drivers –5 What can be concluded from the table? A All occupations were better off in 2015 than in 1985. B Fork-lift truck drivers earned the lowest wages in 2015. C Doctors have earned more than lawyers since 1985. D Professionals received higher percentage increases in income than manual workers.
Mark scheme: D
Q12 · A large bakery buys a flour mill
12 A large bakery buys a flour mill. Which form of integration is this? A conglomerate B horizontal C vertical backwards D vertical forwards
Mark scheme: C
Q13 · Why is the energy supply industry dominated by very large firms in many economies?
13 Why is the energy supply industry dominated by very large firms in many economies? A Government controls prevent the exploitation of consumers. B High fixed capital costs exist. C Labour-intensive production techniques are used. D Non-price advertising increases competition.
Mark scheme: B
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. costs W X Y O Z output Which distance represents the firm’s fixed costs? A WX B WY C XY D XZ
Mark scheme: A
Q15 · An entrepreneur buys a workshop for $200 000 to make plastic boxes
15 An entrepreneur buys a workshop for $200 000 to make plastic boxes. In the first year of operation he spends $70 000 on materials, employs ten production workers paid by the amount produced (piece rate) at a total cost of $80 000 and buys two delivery vehicles for $10 000 each. What are his total variable costs? A $100 000 B $150 000 C $220 000 D $370 000
Mark scheme: B
Q16 · A government increases the rate of income tax in order to pay for extra transfer…
16 A government increases the rate of income tax in order to pay for extra transfer payments, including cash benefits to the poor. What must occur as a result of this? A It changes the distribution of income. B It ensures the equality of incomes. C It leads to more people paying income taxes. D It reduces the level of unemployment.
Mark scheme: A
Q17 · The standard rate for Value Added Tax (sales tax) is 20% in a country
17 The standard rate for Value Added Tax (sales tax) is 20% in a country. Different consumers buying the same product have to pay the same amount of tax. What kind of tax is this? A direct B progressive C proportional D regressive
Mark scheme: D
Q18 · The diagram shows the demand curve D1 and supply curve S1 for a good
18 The diagram shows the demand curve D1 and supply curve S1 for a good. The government introduces a subsidy to encourage production. price S1 $ S2 30 25 20 D1 0 4 5 quantity What will be the total cost of the subsidy to the government? A $40 B $50 C $100 D $150
Mark scheme: B
Q19 · Which statement about interest rate changes is accurate?
19 Which statement about interest rate changes is accurate? A A fall in interest rates will always increase inflation. B A rise in interest rates may increase cost-push inflation. C A rise in interest rates will raise the level of investment in a country. D Interest rate changes have no impact on the level of production.
Mark scheme: B
Q20 · In Uganda, the rate of inflation fell from 5% in 2014 to 2% in 2015
20 In Uganda, the rate of inflation fell from 5% in 2014 to 2% in 2015. Which conclusion can be drawn from this information? A Prices were higher in 2015 than in 2014. B The cost of living fell between 2014 and 2015. C The standard of living fell between 2014 and 2015. D Ugandan citizens were better off in 2015 than 2014.
Mark scheme: A
Q21 · What would not increase the Human Development Index (HDI) of a country?
21 What would not increase the Human Development Index (HDI) of a country? A an increase in the level of car ownership B an increase in life expectancy at birth C a rise in the GDP per head D a rise in the number of years of schooling
Mark scheme: A
Q22 · A country is experiencing a period of full employment
22 A country is experiencing a period of full employment. What is most likely to lead to an increase in demand-pull inflation? A an increase in government spending B an increase in imports C an increase in income tax rates D an increase in sales tax
Mark scheme: A
Q23 · The table shows the percentage change from 2015–2016 in gross domestic product (GDP) and…
23 The table shows the percentage change from 2015–2016 in gross domestic product (GDP) and consumer prices for selected countries. Which country was suffering from economic recession and inflation? country GDP consumer prices A Australia +1.8 +1.3 B Brazil –2.9 +8.3 C China +6.7 +2.0 D Japan +1.1 –0.2
Mark scheme: B
Q24 · Which policy is most likely to reduce relative poverty?
24 Which policy is most likely to reduce relative poverty? A make income tax rates less progressive B reduce benefit payments C reduce the minimum wage D reduce the rate of sales tax
Mark scheme: D
Q25 · Given the following information, which country is most likely to have the highest…
25 Given the following information, which country is most likely to have the highest standard of living? birth death life infant rate rate expectancy mortality rate A Bangladesh 27 10 58 93 B Bhutan 36 14 53 107 C Botswana 31 21 40 57 D Brunei 25 5 72 22
Mark scheme: D
Q26 · In a country the birth rate increased but the population decreased
26 In a country the birth rate increased but the population decreased. What could have happened to other factors to cause this? A a fall in infant mortality but no change in the death rate B a rise in net immigration but no change in the death rate C no change in migration but the death rate rose D the death rate fell with no change in migration
Mark scheme: C
Q27 · The US government decides to reduce the size of the quota on a good it buys from China
27 The US government decides to reduce the size of the quota on a good it buys from China. What is likely to happen? A The good will become cheaper in the US. B The US balance of trade will worsen. C The US government’s revenue will decline. D There will be less of the good imported into the US.
Mark scheme: D
Q28 · What is the most accurate definition of a foreign exchange rate?
28 What is the most accurate definition of a foreign exchange rate? A a rate at which exports are exchanged for imports B a rate determined by the demand and supply of the currency C a value of a currency as fixed by the government D a value of a currency expressed in terms of another currency
Mark scheme: D
Q29 · In 2013, the European Union (EU) levied a 48% tariff on low-priced Chinese solar panels…
29 In 2013, the European Union (EU) levied a 48% tariff on low-priced Chinese solar panels because the low price was the result of subsidies from the Chinese government. Which argument for protectionism was the EU using? A the anti-dumping argument B the infant industry argument C the strategic industry argument D the sunset industry argument
Mark scheme: A
Q30 · A large amount of the agricultural products in a country were damaged by floods
30 A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise
Mark scheme: D
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.
3Fiscal policy3Globalisation, free trade and protection2Inflation and deflation2Living standards2Mixed economic system2Workers2Demand1Economic growth1Firms1Foreign exchange rates1Households1Market failure1Monetary policy1Opportunity cost1Population1Poverty1Price changes1Price determination1Production possibility curve (PPC) diagrams1The factors of production1What you needed in this session
Cambridge’s own grade thresholds for 2019 May/June, Paper 1 · Variant 1. A higher threshold means an easier paper — the bar moves with how the cohort did.