‭Scottish High International School‬

‭Final Examination-Sample Paper (2023-24)‬

‭Class - IX IGCSE‬

‭Name: Date:‬

‭Subject & Code: Economics 0455/12 Component: 1‬

‭Maximum Marks: 30 Duration: 45 minutes‬

‭Instructions:‬
‭●‬ ‭Answer all questions‬

‭●‬ ‭You may use a calculator‬

‭Total Pages: 8‬

‭1‬
‭1.‬‭What could cause a shift of the demand curve from‬‭D1 to D2?‬

‭ .‬ ‭an increase in airline costs‬

A
‭B.‬ ‭an increase in airport taxes‬
‭C.‬ ‭an increase in incomes‬
‭D.‬ ‭an increase in worldwide terrorism‬

2‭ .‬ ‭An airline needs people and equipment. These can‬‭be divided into factors of production.‬
‭What is allocated to its correct factor of production?‬

‭people or equipment‬ ‭factor of production‬

‭A‬ ‭aircraft‬ ‭capital‬

‭B‬ ‭airline owners‬ ‭labour‬

‭C‬ ‭computer network‬ ‭land‬

‭D‬ ‭pilots‬ ‭enterprise‬

‭3.‬‭The diagram shows a country’s production possibility‬‭curve for rice and wheat‬

‭A major flood destroys a large area of agricultural land.‬

‭Which movement could represent the resulting change in output?‬

‭ .‬ ‭P to Q‬
A
‭B.‬ ‭Q to R‬
‭C.‬ ‭R to S‬
‭D.‬ ‭S to P‬

‭4.‬‭What is most likely to increase a firm’s profits?‬

‭ .‬ ‭government controls on its prices‬

A
‭B.‬ ‭grants for the purchase of new machines‬
‭C.‬ ‭an increase in the wages paid to its workers‬
‭D.‬ ‭rising costs of its raw materials‬

‭2‬
‭5.‬‭What is an example of market failure?‬

‭ .‬ ‭city centre congestion‬

A
‭B.‬ ‭low economic growth‬
‭C.‬ ‭rising prices‬
‭D.‬ ‭trade deficits‬

6‭ .‬‭An oil company announced in 2019 that it was starting‬‭its drilling operations for oil‬
‭deposits in the Arctic Ocean. What will be the effect of this?‬

‭ .‬ ‭to increase the supply of raw materials‬

A
‭B.‬ ‭to reduce the level of technology available‬
‭C.‬ ‭to solve the economic problem‬
‭D.‬ ‭to worsen resource allocation‬

‭7.‬‭Which statement about the factors of production‬‭is correct?‬

‭ .‬ ‭Capital is a financial resource and includes savings in banks.‬

A
‭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.‬

8‭ .‬‭What is a disadvantage for a trade union representing‬‭workers in a company that has‬

‭increased specialisation?‬

‭ .‬ ‭capital equipment can be substituted for labour.‬

A
‭B.‬ ‭different abilities can be used fully.‬
‭C.‬ ‭production levels are decreased.‬
‭D.‬ ‭workers are able to gain a higher level of skill.‬

9‭ .‬‭What is an example of an external benefit from‬‭an individual cycling, rather than driving,‬
‭to work?‬

‭ .‬ ‭higher cost of building cycle lanes‬

A
‭B.‬ ‭improved physical fitness to the individual from cycling‬
‭C.‬ ‭lower cost of cycling compared with driving to work‬
‭D.‬ ‭reduced congestion for other road users‬

‭3‬
‭10.‬‭Which organisations can directly fund the growth of firms?‬

‭11.‬‭Which international market is closest to the model‬‭of perfect competition?‬

‭ .‬ ‭diamonds‬
A
‭B.‬ ‭foreign currency‬
‭C.‬ ‭petrol (fuel)‬
‭D.‬ ‭washing machines‬

1‭ 2‬‭.A country’s central bank raised the rate of interest‬‭from 1% to 4% per year. How would‬
‭this change have affected the amount saved and the cost of borrowing by individuals?‬

‭13.‬‭A country raises the school leaving age from 15‬‭to 17 years.‬

‭ hat is the opportunity cost of this increased period of school education to the young people‬
W
‭affected?‬

‭ .‬ ‭costs of training and employing more teachers‬

A
‭B.‬ ‭financial help necessary for school leavers who go to university‬
‭C.‬ ‭government expenditure on building extra classrooms‬
‭D.‬ ‭lost income from paid employment because of school attendance‬

1‭ 4.‬‭A company produces an electric car that can be‬‭driven much further than other electric‬
‭cars without needing recharging. The car does not emit the dangerous fumes that petrol cars‬
‭do. The batteries that power the car are very expensive and the company is building a huge‬
‭factory to produce batteries more cheaply.‬

‭Which concepts can be applied to the above statement?‬

‭A.‬ ‭average cost and mergers‬
‭B.‬ ‭external costs and mixed economy‬
‭C.‬ ‭private costs and economies of scale‬
‭D.‬ ‭public sector and market failure‬

‭4‬
1‭ 5.‬‭The table shows the information that managers of a company have from a week of‬
‭business activity.‬

‭Assuming there are no other costs, what is the value of the fixed costs?‬

‭ .‬ ‭$300‬
A
‭B.‬ ‭$10000‬
‭C.‬ ‭$20000‬
‭D.‬ ‭$30000‬

‭16.‬‭An economy operates entirely as a market system.‬

‭Which type of service would not be provided in such an economy?‬

‭ .‬ ‭commercial banking services‬

A
‭B.‬ ‭free government health services‬
‭C.‬ ‭private educational services‬
‭D.‬ ‭profitable retail services‬

1‭ 7.‬ ‭In 2015, a large UK company attempted to acquire‬‭a rival US medical company to‬
‭become the world’s leading supplier. Both companies specialised in the manufacture of‬
‭medicines for treating rare diseases.‬

‭Which term would describe the acquisition if it had been successful?‬

‭ .‬ ‭backwards vertical integration‬

A
‭B.‬ ‭conglomerate integration‬
‭C.‬ ‭forwards vertical integration‬
‭D.‬ ‭horizontal integration‬

1‭ 8.‬‭A company mining cobalt, invests in machinery‬‭to replace some workers. Eventually‬
‭diseconomies of scale occur. What could cause this situation?‬

‭ .‬ ‭As more cobalt is mined average costs increase.‬

A
‭B.‬ ‭Fewer workers are needed to produce the required output.‬
‭C.‬ ‭Output per hour increases as more machinery is used.‬
‭D.‬ ‭Overhead costs are spread as output increases.‬

‭5‬
‭19.‬‭Which market is likely to be the most competitive?‬

‭barriers to entry‬ ‭number of sellers‬

‭A‬ ‭high‬ ‭few‬

‭B‬ ‭high‬ ‭many‬

‭C‬ ‭low‬ ‭few‬

‭D‬ ‭low‬ ‭many‬

2‭ 0.‬‭A major highway has been built at a cost of US$175‬‭million between Nairobi, Kenya and‬
‭its suburbs. This reduces travel time and increases safety, but there are environmental‬
‭problems for small enterprises along its route.‬

‭Who bears the external costs of this project?‬

‭ .‬ ‭the authorities who paid for the highway‬

A
‭B.‬ ‭the commuters who travel to work in Nairobi‬
‭C.‬ ‭the construction companies that built the highway‬
‭D.‬ ‭the small enterprises along the route‬

‭21.‬‭What might be an external cost of drinking alcohol?‬

‭ .‬ ‭the cost of a bottle of wine‬

A
‭B.‬ ‭the risk of illness from drinking alcohol‬
‭C.‬ ‭the risk of street violence‬
‭D.‬ ‭the tax paid to the government‬

‭22.‬‭The table shows the demand and supply for spices‬‭in a market in Africa.‬

‭ hen the price rises from US$20 to US$30 per kg, what is the price elasticity of demand‬
W
‭(PED) for spices?‬

‭ .‬ ‭0.25‬
A
‭B.‬ ‭0.5‬
‭C.‬ ‭1.0‬
‭D.‬ ‭2.0‬

‭6‬
‭23.‬ ‭In which occupation would wages tend to increase?‬

‭ .‬ ‭in those where a worker is paid weekly‬

A
‭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

2‭ 4.‬‭Which form of production would be least likely‬‭to have the advantages of economies of‬
‭scale?‬

‭ .‬ ‭car manufacturing‬
A
‭B.‬ ‭commercial cereal farming‬
‭C.‬ ‭handmade jewellery‬
‭D.‬ ‭refining of oil products‬

‭25 .‬‭What is a valid economic argument in favour of‬‭trade protection?‬

‭ .‬ ‭It allows greater consumer choice.‬

A
‭B.‬ ‭It encourages trade liberalisation.‬
‭C.‬ ‭It helps support infant industries.‬
‭D.‬ ‭It keeps prices lower.‬

2‭ 6.‬‭A major computer company announced that its profits‬‭had fallen below the level‬
‭predicted. What might have caused this?‬

‭ .‬ ‭increased advertising costs that greatly improved sales‬

A
‭B.‬ ‭low prices that made the company’s product competitive‬
‭C.‬ ‭new technology that reduced costs‬
‭D.‬ ‭reduced sales and low prices‬

‭27.‬‭What is most likely to result from an extension‬‭of specialisation in manufacturing?‬

‭ .‬ ‭for the consumer some prices will be reduced‬

A
‭B.‬ ‭for the country there will be less dependency on international trade‬
‭C.‬ ‭for the employee the work will become more varied‬
‭D.‬ ‭for the producer there will be less efficiency‬

2‭ 8‬‭. What would put a trade union in a strong bargaining‬‭position to negotiate higher wages‬
‭for its members in a particular firm?‬

‭ .‬ ‭The demand for the product produced by the workers has an inelastic demand.‬
A
‭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.‬

‭7‬
2‭ 9.‬‭Which change will make a manufacturing company replace machines with labour to‬
‭maintain the most efficient combination of factors of production?‬

‭ .‬ ‭The price of the product manufactured has increased.‬

A
‭B.‬ ‭The productivity of labour has increased.‬
‭C.‬ ‭The productivity of machinery has increased.‬
‭D.‬ ‭The wages of labour have increased.‬

‭30.‬‭When is a firm most likely to reduce its demand‬‭for labour?‬

‭ .‬ ‭when the demand for the final good increases‬

A
‭B.‬ ‭when the firm’s profitability increases‬
‭C.‬ ‭when the price of labour decreases‬
‭D.‬ ‭when the productivity of labour decreases‬

‭8‬