Cambridge IGCSE
Economics 0455 questions organised by topic, paper, and session.
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Unlock from $6/mo1 Sanjay is a risk taker and sets up a restaurant in Chennai. Sanjay works for the business as a chef. He leases the restaurant building from Raghav and employs him to serve the customers. Which income is earned by Sanjay and Raghav? Sanjay Raghav A interest and profit wages only B interest and wages profits and rent C profits and wages rent and wages D profits only interest and wages Official answer: C
1 Which statement about the factors of production is correct? A Capital is a financial resource and includes savings in banks. B Enterprise is limited in supply and includes office workers. C Labour is a human resource and includes pensioners and children. D Land is a natural resource and includes trees and fish. Official answer: D
1 What is an advantage of competitive markets? A Competition causes inequalities of wealth. B Competition encourages the efficient use of resources. C The economic problem of scarcity is eliminated. D The right quantity of merit goods is guaranteed. Official answer: B
1 Increasing output of one good reduces production of another good. Which economic concept does this change represent? A average cost B diseconomies of scale C economies of scale D opportunity cost Official answer: D
1 To help reduce the price of oil, new supplies are needed. However, objectors oppose exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem? A Oil is a limited resource. B Oil is expensive. C The exploration involves demand and supply. D There are external costs involved in production. Official answer: A
1 To help reduce the price of oil, new supplies are needed. However, objectors oppose exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem? A Oil is a limited resource. B Oil is expensive. C The exploration involves demand and supply. D There are external costs involved in production. Official answer: A
1 To help reduce the price of oil, new supplies are needed. However, objectors oppose exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem? A Oil is a limited resource. B Oil is expensive. C The exploration involves demand and supply. D There are external costs involved in production. Official answer: A
2 A government reduces social security spending by $10 bn in order to increase defence spending by $10 bn. What is this an example of? A expansionary fiscal policy B market forces C price stability D reallocation of resources Official answer: D
2 A builder spends one hour travelling to and from work. He works 40 hours per week for $200. He is given a choice to work 50 hours a week for an extra $75. What would be the opportunity cost to the builder of working the extra hours? A the ability to increase his purchasing power B the additional time travelling to and from work C the increased hourly earnings of $7.50 D the ten hours of leisure time Official answer: D
2 A multinational company (MNC) wishes to invest in a low-income country to expand its palm oil production. What is most likely to make this investment possible? A high cost of clearing forests to increase land for plantations B increased demand for palm oil C shortages of labour in the rural economy D the removal of subsidies for palm oil production Official answer: B
2 What condition in an economy would encourage immigration of labour? A high cost of housing B preference for domestic over foreign qualifications C reduced quotas for foreign workers D shortage of skilled workers Official answer: D
2 The production possibility curve (PPC) shows the hours per day a student has for either entertainment or revision. 15 12 9 6 3 0 0 3 6 9 12 15 entertainment (hours) revision (hours) The student revises for 3 hours a day. As exams approach, the student decides to revise for 9 hours a day. What is the opportunity cost of this decision? A 3 hours of revision B 6 hours of entertainment C 6 hours of revision D 9 hours of entertainment Official answer: B
2 What is an opportunity cost for a consumer spending money on a holiday? A the potential interest earned if the holiday money had been saved B the price paid for an air ticket to the holiday destination C the rubbish created during the holiday which affects the local community D the satisfaction that the consumer gains from the holiday Official answer: A
2 Which diagram shows an opportunity cost by movement from point X to point Y? O A capital goods consumer goods X Y O B capital goods consumer goods X Y O C capital goods consumer goods Y X O D capital goods consumer goods Y X Official answer: C
3 The table shows the maximum production possibilities for goods and services for a country. goods (millions of units) services (millions of units) 100 0 80 20 60 40 40 60 20 80 0 100 The country originally produced only goods but now produces 20 million units of services. The country continues to operate at maximum production possibility. What is the opportunity cost for this country? A 20 million units of goods B 100 million units of goods C 20 million units of services D zero Official answer: A
3 A country’s infrastructure was damaged by a natural disaster. Before the disaster, the country was producing at point Y on the production possibility curve (PPC). Which point represents the country’s production immediately after the disaster? capital goods consumer goods O B C A D Y Official answer: D
3 A farmer sells land used for crops to a firm that will use the land for wind turbines to produce electric power. What is the opportunity cost of this decision by the farmer? A the cost of installing wind turbines B the loss of revenue from crops that grow on the land C the profit made from selling the land D the reduced cost of producing renewable energy Official answer: B
3 The production possibility curve (PPC) shows the hours per day that a person has for either work or leisure. 15 12 9 6 3 0 0 3 6 9 12 15 work (hours) leisure (hours) R S T U V W This person works 6 hours a day but then decides to work 9 hours a day. Which movement shows this change? A T to R B T to U C U to V D U to T Official answer: D
3 Helium is a gas that is limited in supply because it takes thousands of years to form. The US government holds 35% of the world’s supply of helium and has been selling its stocks. Helium is essential in medical scanners. It is also used for party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement? A demand and supply, government subsidy B excess demand, resource allocation C opportunity cost, private monopoly D public sector, factors of production Official answer: D
3 Helium is a gas that is limited in supply because it takes thousands of years to form. The US government holds 35% of the world’s supply of helium and has been selling its stocks. Helium is essential in medical scanners. It is also used for party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement? A demand and supply, government subsidy B excess demand, resource allocation C opportunity cost, private monopoly D public sector, factors of production Official answer: D
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