IGCSE Economics Section B
1.
Question Bank
By Ms.Dharshani Perera
(GCE O/L
May
2008/Q1)
With the aid of examples, explain what is meant by
a) Horizontal integration (2)
b) Vertical integration (2)
2
a) Complete the following table.
Public limited company
Public corporation
Ownership
(i)
(ii)
Source of Finance
(iii)
(iv)
(GCE O/L
May
2008/Q4)
(give one example of
each)
(4)
b)
1. What is meant by the term “privatization”? (2)
2. Briefly explain one advantage and one disadvantage of privatization to
consumers. (4)
3
a) With the aid of examples, distinguish between geographical and occupational
immobility of labour. (4)
b) Briefly explain
I.
One method a government can use to increase the geographical
mobility of labour (2)
II.
One method a government can use to increase the occupational
mobility of labour. (2)
(GCE O/L
May
2008/Q5)
1
IGCSE Economics Section B
4
Question Bank
By Ms.Dharshani Perera
In the United Kingdom there is a shortage of nurses in the public sector. An increasing
number of nurses prefer to work in the private sector of the economy.
a) What is meant by a “shortage of nurses”? (2)
(GCE O/L
May
2008/Q9)
b)
i.
What is meant by the public sector of an economy? (2)
ii.
Briefly explain two reasons why nurses in the United Kingdo9m
might prefer to work in the private sector. (4)
i.
Identify and briefly explain three measures a government can
take to increase the supply of nurses. (6)
ii.
Discuss problems which might arise from the measures
identified in ©(i). (6)
c)
5
In Mozambique from 2000 to 2005 the amount contributed to GDP of the economy fell
from 26% to 23%. The amount contributed by the secondary sector rose from 26% to
30%.
(GCE O/L
May
2008/Q10)
a) Define , with the aid of examples, primary and secondary sectors of an
economy. (4)
b) Briefly explain three factors which can affect the location of secondary
industry in a country of your choice. (6)
c) Examine the advantages and disadvantages of a country transferring
resources from the primary to the secondary sector. (10)
6
a) Identify the four factors of production.(2)
b) Explain what is meant by :
7
i.
The rate of interest (2)
ii.
Profit (2)
In 2005 Cadbury Schweppes, a British chocolate manufacturer, announced plans to
invest £70 million to build a new chewing gum factory in Poland. Cadbury Schweppes
already owned Wedel, the leading chocolate brand in Poland.
(GCE O/L
January
2008/Q1
(GCE O/L
January
2008/Q8
2
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
a)
i.
The combination of Cadbury Schweppes and Wedel is an example of
which type of integration? (1)
ii.
Briefly explain two advantages of this type of integration to Cadbury
Schweppes. (4)
b) Identify and explain three reasons why Cadbury Schweppes might have decided
to locate its new chewing gum factory in Poland. (9)
c) Cadbury Schweppes’ decision to invest £70 million to build a new chewing gum
factory in Poland is in an example of foreign direct investment. Briefly explain
one advantage of foreign direct investment for the economy of Poland. (6)
8
a) Distinguish between a public limited company and a sole trader in terms of:
i.
Ownership (2)
ii.
Finance(2)
iii.
Control (2)
(GCE O/L
January
2008/Q10)
b) Explain three main factors which will influence3 the location of a small retail
shop. (6)
c)
9
i.
Why would a government wish to increase the number of small
businesses in a country? (4)
ii.
Explain two measures which a government could take to achieve this
objective. (4)
With the aid of demand and supply diagrams discuss the effects on an economy of:
a) The introduction of a minimum wage rate, (7)
(GCE O/L
January
2008/Q11
b) A decrease in subsidies to domestic farmers, (7)
c) The discovery of additional oil supplies.(6)
3
IGCSE Economics Section B
10
Question Bank
By Ms.Dharshani Perera
The diagram below shows a production possibility curve for a country.
(GCE O/L
May
2007/Q2
a) Give one example of a capital good. (2)
b) What is the opportunity cost of increasing the production of capital goods from
OA to OB? (1)
c)
11
i.
Which combination of capital goods and consumer goods, OB/OC or
OA/OD, is more likely to generate economic growth? Briefly explain your
answer. (3)
ii.
Identify two ways in which a government can achieve economic growth.(2)
The Chinese economy has changed from a state planned economy to a mixed economy.
Identify two main features of each of the following:
a)
i.
A state planned economy (2)
ii.
A mixed economy (2)
(GCE O/L
May
2007/Q7
b) Many firms in China have been privatized. Identify and explain the main effects
of privatization in China, or a country of your choice, on;
i.
Consumers (5)
ii.
Firms (5)
iii.
Government(6)
4
IGCSE Economics Section B
12
Question Bank
By Ms.Dharshani Perera
In 2005 the government of India stopped Tesco, a large British supermarket chain,
opening supermarkets in India. The main reason given for this decision was that it
would lead to a huge loss of employment in small retail shop.
(GCE O/L
May
2007/Q10
a)
i.
Large supermarket chains benefit from economies of scale. With the
aid of a diagram explain the term “economies of scale” (4)
ii.
Briefly explain two economies of scale which might benefit a large
chain of supermarkets. (4)
i.
Apart from a loss of employment , examine three other reasons which
might lead a government to stop a foreign supermarket chain opening
its country.(6)
ii.
Examine reasons reasons why a British supermarket chain may wish to
open stores in a foreign country. (6)
b)
13
Many people in China prefer to hold goold rather than put their savings into banks,
regardless of interest rates. By contrast , in Europe, an increase in interest rates leads
to an increase in bank deposits.
(GCE O/L
January
2007/Q6)
a)
i.
With reference to the information above, define the term opportunity
cost. (2)
ii.
Explain two reasons why people might prefer to hold gold rather than
put their money into banks. (4)
b) With reference to a factor of production, explain the link between interest
rates and the demand for capital equipment. (4)
c) Explain the possible effects of an increase in interest rates on:
i.
Demand in an economy (6)
ii.
Exchange rates (4)
5
IGCSE Economics Section B
14
Question Bank
By Ms.Dharshani Perera
a) Using examples, distinguish between the primary, secondary and tertiary
sectors in an economy. (6)
b) Explain how changes in the different sectors in an economy of your choice have
affected:
i.
The level of employment in the different sectors (4)
ii.
The location of industry (4)
(GCE O/L
May
2007/Q10
c) Discuss measures a government can use to influence the location of industry in
a country. (6)
15
The diagram below shows the production possibility curves of two countries, A and B.
Each country can produce wheat or tractors or a combination of both.
(GCE O/L
May
2006/Q4
a) What is the opportunity cost of producing an extra tractor in :
i.
Country A(1)
ii.
Country B (1)
b) If specialization took place, which country would increase production of :
i.
Wheat (1)
ii.
Tractors(1)
c) Briefly explain two major problems of a country specializing in an agricultural
product, e.g. wheat (4)
6
IGCSE Economics Section B
16
Question Bank
By Ms.Dharshani Perera
a) Identify;
i.
Two major factors determining the supply of labour in an economy.(2)
ii.
Two major factors determining the demand of labour in an
economy.(2)
(GCE O/L
January
2006/Q5
b) Briefly explain two possible consequences of the demand for labour being
greater than the supply of labour in an economy. (4)
17
Nestle, one of the largest ice cream producers in the world, purchased the luxury
Moveenpick ice cream brand in January 2003. Nestle has also acquired companies
which produce pet food and bottled water.
(GCE O/L
January
2005/Q8)
a) Using the information above, give an example and briefly explain the meaning
of:
i.
Horizontal integration (2)
ii.
Diversification (2)
b) What are the possible advantages and disadvantages of horizontal integration
to :
i.
Firms (7)
ii.
Consumers (5)
c) What are the possible advantages and disadvantages of diversification to a firm
like Nestle? (4)
18
In October 2001 the UK national wage was increased from £3.70 to £4.10 per hour.
a) Explain , with the aid of a supply and demand diagram, the possible effects of
this increase on employment. (8)
(GCE O/L
January
2004/Q6
b) Apart from its effect on employment, discuss other likely economic effects of
an increase in the minimum wages. (12)
7
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
IGCSE Past paper Questions
Q.19(June 2009/Q2)
(a) Use the information in Figure 2a to identify the sector which:
(i) contributed the highest percentage to Gross Domestic Product in 2006. (1)
(ii) employed the highest percentage of the workforce in 2006. (1)
(iii) With the aid of an example, explain what is meant by the tertiary sector.(2)
(iv) What is meant by ‘division of labour’? (2)
(v) With reference to the secondary sector, to what extent do the advantages of division of labour
outweigh the disadvantages in the secondary sector? (5)
(vi) Identify and briefly explain one other factor, apart from division of labour, which could
increase labour productivity in the secondary sector. (2)
8
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(b) Using the data in Figure 2b, explain why Georgia can be seen as a developing economy.(4)
(i) Place a cross in the correct box to identify the structure of the industry shown in Figure 2c.
Explain your answer.
Explanation: (2)
9
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(ii) In your opinion is an industry with a few large producers good for consumers?
Give reasons for your answer. (5)
Q.20 (June 2010/Q2)
In 2000 Deutsche Post, the German post office, was privatised. Until January 2008 it was a
monopoly and the only firm allowed to deliver letters weighing under 50 grams within Germany.
From January 2008 other postal firms were allowed to compete with Deutsche Post.
Study the paragraph above.
(a) From the list below complete the following sentences.
Secondary
companies
tertiary
State
individuals
invisible
private
(i) Before 2000 Deutsche Post was owned by the ...................................... and then it was
transferred to the ...................................... sector. (2)
(ii) Farming is in the primary sector. Car manufacturing is in the ...................................... sector
and the Post Office is in the ...................................... sector of the economy. (2)
(b) After Deutsche Post was privatised and large foreign firms entered the market, the market
structure changed from a monopoly to an oligopoly.
(i) With the aid of examples from a country of your choice, distinguish between monopoly and
oligopoly. (4)
(ii) Do the advantages of privatisation outweigh the disadvantages for the consumer?
Explain your answer. (5)
(c) The area of Gdansk in Poland has suffered from industrial decline.
(i) Which of the following might result from the industrial decline of a region?
10
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(ii) Identify one financial and one non-financial incentive a government can introduce to
encourage firms to set up in an area of industrial decline.
Financial incentive:
Non-financial incentive: (2)
(iii) Are government financial incentives more successful than other policies which encourage
firms to set up in an area? Explain your answer. (5)
(iv) Too many firms in one area can lead to external costs.
Complete the following equation
External costs = .......................................................... – private costs (1)
(v) Identify one external cost and briefly explain one method a government can use to reduce
this cost.
External cost: ..............................................................
Policy:………… (3)
Q.21(June 2008/Q2)
11
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(a) (i) Which sector of the economy contributed a lower percentage of GDP in 2005 than in
2000? (1)
(ii) Give an example of an occupation in the sector named in (a)(i). (1)
(iii) What is meant by productivity of labour? (2)
(iv) Identify and explain two ways in which the government can increase productivity in the
tertiary sector of an economy. (4)
(b) In 2003 a daily charge of £5 was introduced on cars and lorries travelling into London.
The aim of the charge was to reduce externalities in London.
(i) Identify two externalities which result from cars and lorries in a city. (2)
(ii) Suggest one other method to reduce externalities caused by lorries.(1)
(iii) What method is likely to be most successful in reducing the external costs on London roads?
Give reasons for your answer. (5)
12
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(c) Figure 2b shows a table of the costs and revenues for two delivery firms, Giant and Dwarf.
Complete the table above.
(iii) Giant and Dwarf are firms in the private sector of the economy. Distinguish between the
main aims of firms in the private sector and firms in the public sector of the economy. (2)
(iv) Privatisation has taken place in many countries. Examine the relative costs and benefits of
privatisation in improving the efficiency in an economy. (5)
Q.22(November 2007/Q2)
13
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(a) With reference to the data in Figure 1, describe the changes in the market share between 1960
and 2005 of:
(i) smaller independent retailers;(2)
(ii) the four major supermarket chains. (2)
(iii) Briefly explain the cause of these changes. (2)
(iv) Are the benefits to customers from these changes likely to be greater than the disadvantages?
Give reasons for your answers. (4)
(v) Large supermarkets use non-price competition. Give an example of non-price competition.
(1)
(b) (i) In 2004 two large supermarkets merged. State two advantages of this merger to the firms.
(2)
(ii) Briefly explain two ways in which a government can increase the number of small firms in
an economy. (4)
(iii) Briefly explain one measure a government can take to limit the size of firms. (2)
(iv) Are large firms an advantage to an economy? Justify your answer. (6)
14
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
Q.23(November 2008/Q2)
(a) Using Figure 2a, name the manufacturer of mobile phones which had
(i) the largest share of the market in 2005 (1)
(ii) the smallest share of the market in 2005 (1)
(iii) the greatest increase in its market share from 2004 to 2005. (1)
(iv) Calculate the increase in the market share of the company identified in (iii).
(1)
(v) With reference to Figure 2a, what is the market structure of this industry? Give reasons for
your answer. (3)
(b) In 2006, Nokia merged with Siemens. Mergers between firms can bring about economies and
diseconomies of large scale production, shown on Figure 2b.
15
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
Study Figure 2b. Briefly explain
(i) one reason for the shape of the curve to the left of A (2)
(ii) one reason for the shape of the curve to the right of A. (2)
(iii) There are benefits and disadvantages to consumers as a result of the merger between Nokia
and Siemens in 2006. Are the benefits to consumers likely to be greater than the disadvantages?
Give reasons for your answer. (5)
(c) (i) Explain what economists mean by the regional problem in a country. (3)
(ii) Identify two ways in which a government can address the regional problem. (2)
(iii) Which of the two methods identified in (c)(ii) has been more successful in overcoming the
regional problem in a country of your choice? Give reasons for your answer. (4)
Q.24(November 2009/Q2)
The table below shows the daily costs of an Italian pizza restaurant.
(a) Calculate the total cost of producing 40 pizzas. (1)
(b) (i) The restaurant is closed every Monday. What are the total costs on this day? (1)
(ii) Explain your answer to (b)(i). (3)
16
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(c) Pizza Hut is a pizza restaurant chain which owns over 34,000 restaurants worldwide. It benefits
from economies of scale.
(i) Define economies of scale. (2)
(ii) Does expansion always bring benefits to a firm? Give reasons for your answer. (5)
(iii) Pizza Hut faces competition from many other restaurants. Briefly explain two ways in which
consumers can benefit from competition. (4)
(d) In September 2007 China announced it would impose large fines on domestic and foreign
companies that pollute.
(i) Place a cross in the correct box to complete the following sentence. Pollution is considered to be
(1)
(ii) Apart from fines, identify and briefly explain two other policies the Chinese government could
use to deal with pollution. (4)
(iii) Do consumers benefit from anti-pollution policies? Give reasons for your answer. (4)
Q.25(November 2010/Q2)
Paul Chung owns a shop which prints digital photos for its customers. Paul has taken a loan from
the bank to purchase a printer and employs a student, Sam, to work in his shop at weekends.
(a) (i) Paul is an entrepreneur. What is meant by the term ‘entrepreneur’? (1)
Paul’s costs are shown below
Electricity
Sam’s wages
Paper
Loan repayment
Rent
Ink cartridges for printer
(ii) With the aid of one example from the list above, define variable costs. (2)
(iii) From the list above give one example of fixed costs. (1)
17
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(iv) What will happen to fixed costs if Paul increases production from 20,000 to 30,000 prints
each week?
(1)
Paul prints 20,000 photos for his customers each week. He charges 10 cents per print.
(100 cents = $1)
(v) Calculate his total revenue for a week. Show your workings. (2)
(vi) Paul’s variable costs for 20,000 prints are $500. His fixed costs are $600 a week.
Calculate his total costs. (1)
(vii) Calculate Paul’s weekly profit when he produces and sells 20,000 photos. (1)
(b) PhotoPlus, a business with many print shops in different towns, benefits from economies
of scale.
(i) With the aid of one example define ‘economies of scale’. (3)
(ii) PhotoPlus wants to purchase Paul’s business. To what extent would this be in the
interests of the consumers? (5)
(c) (i) PhotoPlus is in the private sector of the economy. Distinguish between the private
and public sectors of an economy in terms of ownership. (2)
(ii) Evaluate the arguments for major industries, e.g. gas and electricity, being in the private
sector of the economy.
(6)
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IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
Q.26(June 2011/Q2)
Mobile phone service providers supply the infrastructure (telephone masts) and services to customers.
Figure 2a shows the market share of these firms in the UK in 2008.
In November 2008 two firms, T-Mobile and Orange, announced plans to merge their UK market operations.
(a) (i) With reference to the data, which firm was the largest service provider before the merger?(2)
(ii) With reference to the data, explain how the market share of the major firms would change after the merger.(2)
(iii) The merger of T-Mobile and Orange is an example of
A a horizontal merger
B a vertical merger
C diversification
D privatisation. (1)
(iv) Briefly explain one reason why a merger between two firms producing similar products may reduce the level of
employment in the industry. (2)
A spokesman for T-Mobile and Orange announced that the merger would benefit shareholders and consumers.
Fill in the missing words in the sentences below from the following list.
public profits
losses mixed
private primary
(v) T-Mobile and Orange are in the .............................................................. sector. (1)
(vi) Shareholders will usually benefit if the merger increases ......................................(1)
19
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
(vii) Do mergers between firms producing similar goods and services always benefit consumers? Give reasons for
your answer.(6)
(b) Cars produce negative externalities.
(i) Identify one negative externality produced by cars. (1)
(ii) Briefly explain one reason why governments try to reduce negative externalities produced by cars.(2)
Study the following paragraph.
In 2009 the Canadian government introduced a state funded discount to buyers of electric cars. The South Korean
government announced it would inject about 400 billion SKwon (US$341 million) into industries to develop the
high-performance batteries needed in electric cars.
(iii) Briefly explain how the two government policies mentioned in the paragraph above could promote the
production and sales of electric cars. (4)
1. Canadian government’s policy:
2. South Korean government’s policy:
(iv) Apart from the two policies mentioned in the paragraph, identify two other policies a government can use to
reduce negative externalities produced by petrol and diesel fuelled cars. (2)
(v) With reference to both methods identified in (iv), which is likely to be better at reducing negative externalities?
Justify your answer. (6)
(Total for Question 2 = 30 marks)
20
IGCSE Economics Section B
Question Bank
By Ms.Dharshani Perera
Q.27(January 2012/Q2)
Julia is a hairdresser. She used to work in a hairdressing salon but now she visits her clients in their own homes.
(a) (i) Julia is an entrepreneur. Define the term entrepreneur. (2)
(ii) Below is a list of some of Julia’s costs. Place each cost in the correct column (3)
Example: Loan repayments
1. Petrol
2. Car insurance
3. Shampoo
Julia has calculated that her fixed costs are $450 each month In July her variable costs were $150
(iii) Calculate Julia’s total costs for July. Show your workings. (2)
The following table shows Julia’s revenue and variable costs for August.
(iv) Calculate Julia’s profit for August. Show your workings. (3)
(b) Julia received help from the government to start her business.
(i) Identify and briefly explain two methods a government can use to help individuals to start their own businesses.
(4)
(ii) How important are government schemes to encourage the setting up of small firms in an economy? (6)
(c) (i) What is meant by the term privatisation? (2)
(ii) Briefly explain one reason why privatised firms may need to be regulated. (2)
(iii) Discuss whether the costs of privatisation outweigh the benefits to the economy. (6)
(Total for Question 2 = 30 marks)
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