Cambridge IGCSE Economics 0455 — 2025 May/June Paper 1 · Variant 3

Question 1

1 What is not a factor of production? A a 10 dollar note B a farm labourer C a farm shop D a tractor

Accepted Answer

A

Question 2

2 A person works at home making small cakes. She can make 30 cakes an hour and works for four hours a day. The total cost of the ingredients is $50 and she sells the cakes for $2 each. What is the opportunity cost if she takes a working day for a holiday? A $50 B $240 C 30 cakes D 120 cakes

Accepted Answer

D

Question 3

3 An economy produces different types of goods using its limited resources. This can be illustrated by a production possibility curve (PPC). consumer X goods O capital goods What does point X on the PPC show? A All resources are used for the production of consumer goods. B More resources are allocated to producing capital goods than consumer goods. C Resources are allocated to produce a mixture of consumer goods and capital goods. D Total resources are not being fully utilised for production of these goods.

Accepted Answer

C

Question 4

4 What is the function of the price mechanism in a market economy? A allocating resources and guiding choices B allowing governments to provide price stability C enabling markets to operate fairly D preventing competitors from entering a market

Accepted Answer

A

Question 5

5 The table shows the demand and supply schedules for rice. The current price is $2.00 per kilo. quantity demanded quantity supplied price per kilo $ (million tonnes) (million tonnes) 2.50 5 30 2.00 10 25 1.50 20 20 1.00 30 15 0.50 40 10 What will happen if the price is reduced to $1.00 per kilo? A The demand curve will shift to the left. B The market will move from shortage to surplus. C The market will move from surplus to shortage. D The supply curve will shift to the right.

Accepted Answer

C

Question 6

6 The diagram shows the market for cherries in Chile. price S P2 E2 P1 E1 D2 D1 O Q1 Q2 quantity What would cause a change in the market equilibrium from E1 to E2? A a newspaper article stating cherries are good for your health B a poor harvest for cherries due to bad weather C an increase in the imports of cherries from Israel D the government reducing the sales tax on cherries

Accepted Answer

A

Question 7

7 A German car producer estimates the price elasticity of demand (PED) for its cars is −2.0. What can be concluded from this information? A its cars are price elastic B its cars are price inelastic C its cars are unitary elastic D its cars take time to produce

Accepted Answer

A

Question 8

8 The diagrams show the supply curves of four firms. Which firm has a price elasticity of supply of greater than zero but less than one? A B S price price S O quantity O quantity C D price S price S O quantity O quantity

Accepted Answer

B

Question 9

9 Which combination correctly describes features of a market economic system? ownership of resource allocation land and capital A by government private sector B by government public sector C by price mechanism private sector D by price mechanism public sector

Accepted Answer

C

Question 10

10 A country’s central bank raised the rate of interest from 1% to 4% per year. How would this change have affected the amount saved and the cost of borrowing by individuals? amount saved cost of borrowing A decreased decreased B decreased increased C increased decreased D increased increased

Accepted Answer

D

Question 11

11 What is a non-wage factor influencing an individual’s choice of occupation? A the availability of overtime work B the hourly rate of pay C the opportunity to get a financial bonus D the risk of unemployment

Accepted Answer

D

Question 12

12 Workers in the secondary sector of an economy earn more on average than workers in the tertiary sector. Which combination will most likely increase differences in wages between workers in the secondary and tertiary sector of an economy? secondary sector tertiary sector A increased productivity increased supply of workers B decreased demand for products decreased productivity of workers C increased supply of workers increased demand for products D weaker bargaining strengths of trade unions decreased minimum wage

Accepted Answer

A

Question 13

13 A manufacturing firm increases the scale of its production. Its average total cost (ATC) curve in the long run is shown below. At which point on the ATC curve is the firm experiencing diseconomies of scale? cost A ATC D B C O output

Accepted Answer

D

Question 14

14 What is most likely to increase the demand for labour in an industry? A a decrease in the price of capital used by the industry B a decrease in the productivity of labour in the industry C an increase in the demand for the industry’s product D an increase in the wage paid to labour in the industry

Accepted Answer

C

Question 15

15 A firm has fixed costs of $100 for its daily output. The table shows its daily total variable costs. output (units) 1 2 3 4 total variable 200 360 500 720 costs ($) What can be concluded about the firm’s average total cost? A It falls continuously. B It is highest at output 4 units. C It is lowest at output 3 units. D It rises continuously.

Accepted Answer

C

Question 16

16 A market changes from being very competitive to being a monopoly. What is likely to happen to output and price in this market? output price A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

B

Question 17

17 What is the most likely reason for a government to aim for price stability? A to improve international competitiveness B to increase workers' wage demands C to reduce consumer spending D to reduce spending on employment-related benefits

Accepted Answer

A

Question 18

18 A country's unemployment rate increased from 3.6% to 4.2% in one year. What might be the consequences for tax revenues and welfare payments? tax revenues welfare payments A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

B

Question 19

19 In a country, some highly-paid workers reduce their working hours because of very high income tax rates at higher levels of income. What is a disadvantage of this income taxation? A It creates uncertainty for workers. B It does not maximise tax revenue. C It is inequitable for lower-income earners. D It is regressive in the distribution of income.

Accepted Answer

B

Question 20

20 What is most likely to be a reason for taxing oil? A to conserve oil resources B to create employment C to encourage economic growth D to reduce oil prices

Accepted Answer

A

Question 21

21 Brazil’s real GDP fell by 3.8% in a year. What might have caused this? A a decrease in imports B a decrease in income tax C an increase in interest rates D an increase in output per worker

Accepted Answer

C

Question 22

22 Factory owners invest in technologically-advanced industrial production by building new large-scale, energy-efficient factories. What is a negative consequence of this for local people? A a large increase in the factory owners’ incomes B a reduction in the rate of inflation C a rise in structural unemployment D lower emissions of carbon gases

Accepted Answer

C

Question 23

23 Country X measures unemployment by counting the number of people claiming unemployment benefit. Why might this method underestimate the level of unemployment? A Some benefit claimants are working unofficially. B Some employees work overtime. C Some jobseekers do not claim benefits. D Some people are unable to work.

Accepted Answer

C

Question 24

24 What is likely to cause deflation? A higher employment B higher production costs C increased money supply D technological advances

Accepted Answer

D

Question 25

25 What is the most likely reason that an improved standard of education will alleviate poverty? A It will decrease the productivity of workers. B It will decrease the rate of unemployment. C It will increase the government budget deficit. D It will increase the rate of inflation of an economy.

Accepted Answer

B

Question 26

26 What will increase a country's population, all other things being equal? A a rise in emigration B a rise in immigration C death rates higher than birth rates D decreased life expectancy

Accepted Answer

B

Question 27

27 Country Y decides to specialise in the domestic mining of rare metals required in the production of electric-car batteries. What is a likely benefit of this for country Y? A increased emigration B increased exports C increased imports D increased tariff revenue

Accepted Answer

B

Question 28

28 The UK government increases the price of steel imported from Germany by increasing an existing tariff. Assuming steel has price-inelastic demand, what would be the effect on the revenues of German steel producers and the UK government? German steel UK producers’ government revenue revenue A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

B

Question 29

29 The table shows the value of the UK pound (£) against the US dollar ($) in June and September. June September £1 = $1.48 £1 = $1.32 What will be the likely consequence for the UK economy in the short run of the change in the exchange rate? A an increase in the budget deficit B an increase in the price of exports C an increase in the price of imports D an increase in unemployment

Accepted Answer

C

Question 30

30 The table shows a selection of economic data for a country. $m primary income 1000 secondary income –500 total value of exported goods 1000 total value of imported goods 2000 total value of exported services 800 total value of imported services 200 What is the current account balance of the balance of payments of this country? A $100m B $600m C $4500m D $4725m

Accepted Answer

A

Cambridge IGCSE Economics 0455 — 2025 May/June Paper 1 · Variant 3

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · What is not a factor of production?

Q2 · A person works at home making small cakes

Q3 · An economy produces different types of goods using its limited resources

Q4 · What is the function of the price mechanism in a market economy?

Q5 · The table shows the demand and supply schedules for rice

Q6 · The diagram shows the market for cherries in Chile

Q7 · A German car producer estimates the price elasticity of demand (PED) for its cars is −2.0

Q8 · The diagrams show the supply curves of four firms

Q9 · Which combination correctly describes features of a market economic system?

Q10 · A country’s central bank raised the rate of interest from 1% to 4% per year

Q11 · What is a non-wage factor influencing an individual’s choice of occupation?

Q12 · Workers in the secondary sector of an economy earn more on average than workers in the…

Q13 · A manufacturing firm increases the scale of its production

Q14 · What is most likely to increase the demand for labour in an industry?

Q15 · A firm has fixed costs of $100 for its daily output

Q16 · A market changes from being very competitive to being a monopoly

Q17 · What is the most likely reason for a government to aim for price stability?

Q18 · A country's unemployment rate increased from 3.6% to 4.2% in one year

Q19 · In a country, some highly-paid workers reduce their working hours because of very high…

Q20 · What is most likely to be a reason for taxing oil?

Q21 · Brazil’s real GDP fell by 3.8% in a year

Q22 · Factory owners invest in technologically-advanced industrial production by building new…

Q23 · Country X measures unemployment by counting the number of people claiming unemployment…

Q24 · What is likely to cause deflation?

Q25 · What is the most likely reason that an improved standard of education will alleviate…

Q26 · What will increase a country's population, all other things being equal?

Q27 · Country Y decides to specialise in the domestic mining of rare metals required in the…

Q28 · The UK government increases the price of steel imported from Germany by increasing an…

Q29 · The table shows the value of the UK pound (£) against the US dollar ($) in June and…

Q30 · The table shows a selection of economic data for a country

What was in this paper

What you needed in this session

Other variants, same session

This paper, other years