IGCSE
Cambridge (CIE)
Economics
15 mins
15 questions
Paper 1
3.6 Firms &
Production
Demand for the Factors of Production / Labour & Capital-intensive Production /
Production & Productivity
Easy (5 questions)
/5
Medium (5 questions)
/5
Hard (5 questions)
/5
Total Marks
/15
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1
Easy Questions
1 What does productivity in economics refer to?
A. The total revenue earned by a company in a year
B. The number of employees working in a firm
C. The amount of outputs to inputs in the production process
D. The amount of profit generated by a business
(1 mark)
2 How can an increase in productivity benefit a business?
A. By reducing the number of employees required
B. By decreasing the demand for its products
C. By increasing costs and lowering profitability
D. By producing more output with the same amount of input
(1 mark)
3 How does technology improve productivity?
A. Technology has no impact on productivity
B. Technology can lead to decreased efficiency
C. Technology can enhance efficiency and output
D. Technology only affects managers decisions
(1 mark)
4 Which of the following examples is derived demand?
A. The demand for entertainment services
B. The demand for clothing and fashion items
C. The demand for labour in the construction industry
D. The demand for personal electronics
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2
(1 mark)
5 Which of the following is not a disadvantage of labour intensive production?
A. The firm may find it difficult to recruit workers when needed & letting go of staff
when they are not required is unpopular
B. The firm can adjust the number of workers hired as demand for its goods/services
fluctuate
C. Each worker requires both wage & non-wage benefits, which can prove expensive
for the firm
D. The more skilled the labour required, the higher the wage bill for the firm will be
(1 mark)
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3
Medium Questions
1 All countries need to produce food.
Which type of agriculture would make the best use of the resources of developing and
developed economies?
developing
developed
A
capital-intensive
capital-intensive
B
capital-intensive
labour-intensive
C
labour-intensive
capital-intensive
D
labour-intensive
labour-intensive
(1 mark)
2 What is the main difference between capital-intensive production and labour-intensive
production?
A. the market structure of the production process
B. the output that the production process creates
C. the resources on which the production relies
D. the size of the firm that uses the production process
(1 mark)
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4
3 How might an increase in workforce education levels impact productivity growth?
A. It could lead to decreased technological innovation
B. It might reduce overall labor force participation
C. It could result in a more skilled and adaptable workforce
D. It might lead to decreased demand for goods and services
(1 mark)
4 Which factor will lead to long-term productivity growth in an economy?
A. A decrease in technological advancements
B. An increase in regulations and bureaucratic processes
C. Growth in human capital through education and training
D. A decrease in capital investment
(1 mark)
5 How might a decrease in the demand for cars impact derived demand for steel used in
car manufacturing?
A. It could lead to decreased derived demand for steel due to reduced car production
B. It might lead to increased derived demand for steel as manufacturers look to reduce
costs
C. It would have no impact on derived demand for steel
D. It could lead to increased derived demand for steel as alternative materials are
sought
(1 mark)
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5
Hard Questions
1 The table shows units of output, value of output and number of people employed in an
industry over three years.
output (units, millions)
output value ($ millions)
number employed (000)
year 1
10
10
5
year 2
21
25
7
year 3
32
40
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What can be concluded from the table?
A. Inflation has increased.
B. Productivity has increased.
C. Profit has increased.
D. Working population has increased.
(1 mark)
2 What might cause a decrease in the price of factors of production?
A. Increased demand for the final goods and services
B. A shortage of labour and other inputs
C. Reduced costs of production materials
D. Technological advancements that reduce the need for labour
(1 mark)
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3 How might government policies impact the availability of factors of production?
A. Government policies have no influence on factor availability
B. Government interventions can increase factor scarcity
C. Favorable policies can lead to improved factor availability
D. Government policies only affect consumer goods prices
(1 mark)
4 The diagrams below show the demand and supply for tyres and rubber. Which of the
following statements describing the diagrams is correct?
A. In the tyre market, the increased demand for tyres is represented by a shift in the
demand curve from D1 to D2
B. Rubber is a natural resource (land) & there is now decreased demand from the firm
for rubber in order to meet higher levels of tyre production
C. The demand for tyres is derived demand from the demand for rubber
D. If a tyre manufacturer benefits from increased demand for their tyres, they will
require less rubber to meet the demand
(1 mark)
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7
5 What impact might a capital-intensive approach have on production costs?
A. It would lead to lower initial investment costs
B. It would result in higher ongoing labour costs
C. It would decrease the need for energy consumption
D. It would lead to unstable production processes
(1 mark)
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