Cambridge IGCSE Economics 0455 — 2020 Oct/Nov Paper 1 · Variant 3

Question 1

1 Why do consumers have to make choices when spending their income? A Advertising encourages consumer spending. B Consumers have unlimited incomes. C Consumer wants cannot all be satisfied with their income. D Not all products will be attractive to consumers.

Accepted Answer

C

Question 2

2 What is the key role of an entrepreneur? A inventor B risk taker C shareholder D worker

Accepted Answer

B

Question 3

3 The diagram shows the production possibility curve (PPC) of an economy producing at point X. capital 100 goods X 70 0 0 180 240 consumer goods What would be the opportunity cost of moving from point X to produce only consumer goods? A 60 units of consumer goods B 70 units of capital goods C 100 units of capital goods D 180 units of consumer goods

Accepted Answer

B

Question 4

4 Economics is divided into two: microeconomics and macroeconomics. statement 1 When the price of oil falls there is an expansion in demand. statement 2 The Organization of the Petroleum Exporting Countries (OPEC) can influence the price of oil. Which combination correctly describes these two statements? statement 1 statement 2 A macroeconomic statement macroeconomic statement B macroeconomic statement microeconomic statement C microeconomic statement macroeconomic statement D microeconomic statement microeconomic statement

Accepted Answer

D

Question 5

5 What is a disadvantage of a market economic system? A Entrepreneurs lack incentives to produce what consumers want. B Government intervention will reduce the efficiency of firms. C Market dominance by firms can lead to higher prices. D There is underproduction of demerit goods.

Accepted Answer

C

Question 6

6 The diagram shows the demand curve for coffee in the US. price P1 P2 demand for coffee O Q1 Q2 quantity Why did the quantity demanded move from Q1 to Q2? A Coffee became cheaper. B Incomes rose in the US. C There was a successful advertising campaign by coffee retailers. D The price of substitutes for coffee rose.

Accepted Answer

A

Question 7

7 In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation? A B price price of salt of salt P2 P2 P1 P1 D D O quantity O quantity C D price price of salt of salt P2 P2 P1 D P1 D O quantity O quantity

Accepted Answer

D

Question 8

8 In which occupation would wages tend to increase? A in those where a worker is paid weekly B in those where a worker needs less training C in those where there is an excess demand for labour D in those where work becomes less dangerous

Accepted Answer

C

Question 9

9 Which row shows a characteristic of money and a function of money? characteristic function A acceptability medium of exchange B cash measure of value C divisibility portability D store of value bank deposit

Accepted Answer

A

Question 10

10 The table shows how household spending changes with income. income spending ($ per month) ($ per month) 3000 3150 3300 3375 3600 3500 3900 3825 4200 4050 4500 4275 What is the lowest level of income at which savings are positive? A $3000 B $3600 C $3900 D $4200

Accepted Answer

B

Question 11

11 What can a central bank increase in order to reduce consumer borrowing? A  commercial bank deposits B  government spending C  the exchange rate D  the rate of interest

Accepted Answer

D

Question 12

12 The table shows the total cost of firm X at each level of output. output total cost 0 3 1 5 2 6 3 9 At which level of output does total variable cost exceed total fixed cost? A 0 B 1 C 2 D 3

Accepted Answer

D

Question 13

13 A firm has fixed costs of $1000. The table shows the variable cost at different levels of output. output (units) 1 2 3 4 variable cost ($) 100 190 270 350 If the goods are sold for $500 each, how much profit will be made from the sale of 4 units? A $650 B $1000 C $1650 D $2000

Accepted Answer

A

Question 14

14 Which combination is usually found in a monopoly? A many buyers and many sellers B many buyers and single seller C single buyer and many sellers D single buyer and single seller

Accepted Answer

B

Question 15

15 What is usually considered to be an advantage to a firm of using division of labour? A high labour turnover B increased mechanisation C movement of labour between tasks D need for quality control

Accepted Answer

B

Question 16

16 What are two aims that a government normally pursues when managing the performance of the whole economy? A to encourage an increase in production and to prevent high inflation B to ensure no one is unemployed and to reduce exports C to give everyone equal incomes and to increase government revenue D to protect the environment and to reduce interest rates

Accepted Answer

A

Question 17

17 What is most likely to be the responsibility of a central government? A the provision of immigration officials at an airport B the provision of security cameras in a shopping centre C the provision of security staff at a bank D the provision of ticket inspectors on a train

Accepted Answer

A

Question 18

18 A government decreased the tax on all goods produced in its country. What is the most likely consequence of this? A a decrease in exports B an increase in imports C an increase in production D a worsening of the balance of trade in goods

Accepted Answer

C

Question 19

19 Which government policy measure would cause an increase in a country’s supply of labour? A increasing unemployment benefits B lowering interest rates C raising income tax D raising the age of retirement

Accepted Answer

D

Question 20

20 Due to a rise in the number of retired people, there has been increased demand for some government expenditure. Which type of government expenditure is most likely to be directly affected? A defence B health services C re-training grants D street lighting

Accepted Answer

B

Question 21

21 The diagrams show Italy’s unemployment rate and GDP per head. Italy’s unemployment rate Italy’s GDP per head 13 39 000 % $ 38 000 11 37 000 9 36 000 35 000 7 34 000 5 33 000 2000 2005 2010 2015 2000 2005 2010 2015 year year When do Italy’s unemployment rate and GDP per head rise at the same time? A 2000–2001 B 2007–2008 C 2009–2010 D 2014–2015

Accepted Answer

B

Question 22

22 An economy is experiencing rising prices. Which government policy will help reduce consumer expenditure? A introducing compulsory saving for income earners B investing more in building infrastructure C issuing more banknotes and coins D reducing indirect taxes

Accepted Answer

A

Question 23

23 Some goods take a greater percentage of a typical household’s total spending than others. How is this accounted for in the construction of a consumer prices index? A by deducting the goods B by giving a weight to the goods C by taking an average of price fluctuations during a year D by using the price elasticity of demand for the goods

Accepted Answer

B

Question 24

24 One of the indicators of living standards is the Human Development Index (HDI). What is not taken into consideration when calculating the HDI? A education B income per head C level of savings D life expectancy

Accepted Answer

C

Question 25

25 Which factor in the world’s low-income countries limits their economic development? A balance of payments surpluses B high saving ratios C large inflows of foreign investment D rapid population growth

Accepted Answer

D

Question 26

26 The table shows the percentage employment in the primary, secondary and service sectors in four countries. Which country is likely to be the most developed? percentage employment primary secondary service country sector sector sector A 10 35 55 B 20 60 20 C 35 35 30 D 40 40 20

Accepted Answer

A

Question 27

27 What would not be included in the current account of the balance of payments? A dividends earned from a firm in another country B imports of TVs from another country C purchase of a house in another country D rents paid to owners of land in another country

Accepted Answer

C

Question 28

28 What is most likely to discourage international specialisation and trade for an economy? A decreasing labour supply B decreasing transport costs C increasing oil prices D increasing trade barriers

Accepted Answer

D

Question 29

29 Many low-income countries rely on multinational companies (MNCs) to provide economic development. What is a disadvantage of this for the low-income country? A Local firms close because MNCs are more efficient. B New production techniques are introduced. C The balance of payments may improve. D The MNCs have to pay taxes on their profits.

Accepted Answer

A

Question 30

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

Accepted Answer

C

Cambridge IGCSE Economics 0455 — 2020 Oct/Nov Paper 1 · Variant 3

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · Why do consumers have to make choices when spending their income?

Q2 · What is the key role of an entrepreneur?

Q3 · The diagram shows the production possibility curve (PPC) of an economy producing at point…

Q4 · Economics is divided into two: microeconomics and macroeconomics

Q5 · What is a disadvantage of a market economic system?

Q6 · The diagram shows the demand curve for coffee in the US

Q7 · In an African country with large areas of tropical desert the price elasticity of demand…

Q8 · In which occupation would wages tend to increase?

Q9 · Which row shows a characteristic of money and a function of money?

Q10 · The table shows how household spending changes with income

Q11 · What can a central bank increase in order to reduce consumer borrowing?

Q12 · The table shows the total cost of firm X at each level of output

Q13 · A firm has fixed costs of $1000

Q14 · Which combination is usually found in a monopoly?

Q15 · What is usually considered to be an advantage to a firm of using division of labour?

Q16 · What are two aims that a government normally pursues when managing the performance of the…

Q17 · What is most likely to be the responsibility of a central government?

Q18 · A government decreased the tax on all goods produced in its country

Q19 · Which government policy measure would cause an increase in a country’s supply of labour?

Q20 · Due to a rise in the number of retired people, there has been increased demand for some…

Q21 · The diagrams show Italy’s unemployment rate and GDP per head

Q22 · An economy is experiencing rising prices

Q23 · Some goods take a greater percentage of a typical household’s total spending than others

Q24 · One of the indicators of living standards is the Human Development Index (HDI)

Q25 · Which factor in the world’s low-income countries limits their economic development?

Q26 · The table shows the percentage employment in the primary, secondary and service sectors…

Q27 · What would not be included in the current account of the balance of payments?

Q28 · What is most likely to discourage international specialisation and trade for an economy?

Q29 · Many low-income countries rely on multinational companies (MNCs) to provide economic…

Q30 · The diagram shows the value of a country’s exports and imports of goods over five years

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