IGCSE and O Level Economics: mid-course assessment

(Units 1.1 to 4.4)

Paper 1 Multiple choice 45 minutes

Additional materials: multiple choice answer sheet

soft clean eraser
soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

There are 30 questions on this paper. Answer all questions. For each
question there are four possible answers A, B, C, and D.
Choose the one you consider correct and record your choice in soft pencil
on the separate answer sheet.
Each correct answer will score one mark. A mark will not be deducted for a
wrong answer.

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
1 Why is choice central to the basic economic problem?
A There may different types of business organization
B Increased demand leads to higher market prices
C Scarce economic resources have alternative uses
D Many different firms will compete to supply the same product

2 An unemployed man accepts a new job. Which of the following is the

opportunity cost of his decision?
A The leisure time lost
B The cost of travel to and from work
C The training time required in the new job
D The wages of the new job

3 What is a factor of production?

A A unit of output
B A scarce resource used to produce goods and services
C An economy of scale
D A key part of a manufacturing process

4 A government must decide whether to increase spending on health care or

defence by $100 million. What economic concept does this illustrate?
A The price mechanism
B A mixed economy
C Opportunity cost
D Factor substitution

5 The allocation of resources in a mixed economy is determined by:

A The decisions of firms only
B The decisions of consumers only
C The decisions of consumers and firms
D The decisions of consumers, firms and government

6 A farmer pays his landowner for the use of his field.

What is the income of the landowner called?
A Interest
B Profit
C Rent
D Wages

7 What is likely to increase the supply of meat brought to market?

A A decrease in the number of cattle farms
B A quota on the importation of meat
C A sales tax on meat
D A decrease in the cost of cattle feed

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
8 The market for an agricultural product has a surplus due to good harvests.
What will cause the market to return to equilibrium?
A A decrease in demand
B A rise in price
C An increase in supply
D A fall in price

9 Which pair of products are in complementary or joint demand?

A Oranges and lemons
B Cars and petrol
C Socks and shoes
D Tea and coffee

10 A firm increases spending on advertising its product. What is its objective?

A To shift its demand curve to the right
B To shift its supply curve to the left
C To shift its demand curve to the left
D To shift its supply curve to the right

11 A consumer’s demand curve for a product shows how quantity purchased

varies with:
A The product price
B The consumer’s disposable income
C The consumer’s tastes
D The price of substitutes

12 What is most likely to cause an increase in the demand for apples?

A A decrease in the supply of apples
B A health scare about eating apples
C An increase in the price of a complement
D An increase in the price of a close substitute

13 In many developing countries people grow foodstuffs and will sell their
produce in order to buy other products. What is required to allow this form of
exchange to take place?
A A mixed economy
B Money
C Ownership of land
D Barter

14 Which one of the following is a function of a central bank?

A To lend money to private companies
B To set every interest rate
C To issue new notes and coins
D To determine the level of taxation

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
15 A multinational:
A Exports to many different countries
B Employs workers from different countries
C Has shareholders all over the world
D Has production units in different countries

16 A shopkeeper runs a business as a sole trader. What does this mean?

A The shopkeeper has limited liability
B All the profits of the business go to the shopkeeper
C The business is owned by shareholders
D The business is incorporated

17 A stock exchange provides:

A A means of raising finance for private limited companies
B A means of purchasing foreign currency
C A means of selling shares publicly
D A means of raising debt finance for public limited companies

18 What is unlikely to be a function of a trade union?

A Improving working conditions
B Representing its members’ interests
C Negotiating improvements in pay for members
D Reducing the cost of labour

19 Which of the following can explain why the earnings of some footballers are
so high?
A They are able to undertake other jobs during the week
B They have to train every day
C They have specialist skills in much demand
D Football is a popular sport

20 Which of the following groups of workers is most likely to be successful in

obtaining a wage increase?
A Farm workers during a period of bad weather
B Electrical engineers when more firms are installing solar energy panels
C Police following removal of minimum height restrictions
D Workers on an assembly line that is becoming increasingly automated

21 What could explain why the average hourly earnings of train drivers are
higher than the average hourly earnings of nurses?
A Train drivers are in short supply
B Train drivers have a shorter training period than nurses
C Train drivers have further to travel to work
D Train drivers work longer hours than nurses

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
22 Which method of payment is an office manager most likely to receive?
A Commission
B Hourly rates
C Piece rates
D Salary

23 How is a reduction in interest rates most likely to affect consumer saving and
spending?

Saving Spending
A fall fall
B fall rise
C rise fall
D rise rise

24 A state-owned industry is sold to the private sector. How is this likely to affect
the type of organization?
A It will change from a public company to a public corporation
B It will change from a private company to a public corporation
C It will change from a public corporation to public company
D It will change from a public corporation to private company

25 Which one of the following jobs will be classified as part of the secondary
sector of an economy?
A A worker in a firm producing trees and plants for sale
B An assembly line worker producing computer equipment
C A manager in a government department
D A nurse in a private sector hospital

26 A firm manufacturing garden pots has the following costs. Which one is a
variable cost?
A The payment of interest charges on loans
B The payment of insurance premiums
C The purchase of clay and other raw materials
D The payment of rent for the factory unit

27 A firm’s total variable cost is $2,000 and its total fixed cost is $8,000 when
total output is 5,000 units per week.
 Calculate the average cost.
A $2 B $3 C $4 D $5

28 Which form of income is earned by the factor of production enterprise?

A Interest
B Profit
C Rent
D Wages

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
29 What does a firm need to do to maximize its profit?
A Maximize total revenue
B Minimize total costs
C Maximize the difference between total revenue and total variable cost
D Maximize the difference between total revenue and total cost

30 A government uses competition policy to control monopolies. What is the

policy designed to stop?
A New firms from entering the markets of established businesses
B Firms spending too much on advertising
C The use of artificial barriers to market entry
D The formation of large firms

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
Answer sheet
Answer all questions. For each question there are four possible answers A, B, C,
and D. Choose the one you consider correct and ‘tick’ your choice using a soft
pencil in the boxes provided.

Question A B C D Question A B C D
1 16
2 17
3 18
4 19
5 20
6 21
7 22
8 23
9 24
10 25
11 26
12 27
13 28
14 29
15 30

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute