Cambridge IGCSE Economics: Demand for factors, production and productivity, and market structure (0455) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

This set tests sections 3.6 and 3.8 of the Cambridge IGCSE Economics 0455 syllabus for examination in 2026. The subject is not tiered. Every firm, place and figure is invented. Teaching is in the study guide and the revision notes. Other links: the Cambridge IGCSE Economics hub, the printable checklist and the free diagnostics.

Questions

1. Define derived demand and give one example. [2]

2. A print shop in Town E sells 4,000 printed pages a week. Demand then rises to 5,000 pages a week. Each operator produces 500 pages a week, and this does not change.

(a) Calculate the number of operators needed before and after the rise in demand. [2] (b) Calculate the percentage rise in the number of operators. [1]

3. A furniture workshop made 2,400 chairs with 16 workers in year 1. In year 2 it made 2,730 chairs with 21 workers.

(a) Calculate labour productivity in each year. [2] (b) Calculate the percentage change in labour productivity. [2] (c) Explain one possible reason why productivity changed as it did. [2]

4. Firm R can make 400 units a day by Method 1 (9 workers and 1 machine) or Method 2 (3 workers and 4 machines). A worker costs 70 a day and a machine costs 120 a day.

(a) Calculate the daily cost of each method. [2] (b) State which method a cost-minimising firm would choose. [1] (c) The wage falls to 40 a day. Calculate the new cost of each method and state the effect on the choice. [3]

5. Explain two reasons why a firm might choose capital-intensive production. [4]

6.

(a) Distinguish between production and productivity. [2] (b) Explain two influences on productivity. [4]

7. Town C has forty street-food stalls selling similar meals. Explain how a high number of firms is likely to affect price, quality, choice and profit. [6]

8. Firm Z sold 6,300 units in a market where 9,000 units were sold in total. It raised its price from 8.00 to 10.00.

(a) Calculate Firm Z’s market share. [2] (b) Calculate the percentage rise in its price. [2] (c) Explain two disadvantages of monopoly for consumers. [4]

9. Explain two advantages of monopoly. [4]

10. Method L costs 1,500 fixed plus 4 per unit. Method C costs 6,000 fixed plus 1.5 per unit.

(a) Calculate the total cost of each method for 3,000 units. [2] (b) Calculate the output at which the two methods cost the same. [2] (c) Advise a firm that expects to make 800 units a month, using figures. [2]

11. On an island, four firms once supplied bottled water. Together they sold 60,000 bottles a month at 1.50 each, with a cost of 1.40 per bottle. One firm now supplies the island. It sells 50,000 bottles a month at 1.80, with a cost of 1.10 per bottle.

(a) Calculate the total monthly profit before and after the change. [3] (b) Calculate the percentage change in price. [1] (c) Evaluate whether island consumers benefit from the single supplier. [6]

Answers

1. Demand for a factor of production that comes from the demand for the product it helps to make [1]. Example: demand for bakers comes from demand for bread [1]. [2] Examiner insight: A definition gains credit when it says “derived from” the product market. An example alone does not show that you know why the demand arises.

2. (a) Before: 4,000 ÷ 500 = 8 operators [1]. After: 5,000 ÷ 500 = 10 operators [1]. (b) (10 − 8) ÷ 8 × 100 = 25% [1]. Examiner insight: Show each division. Clear working lets the reader see your method, and it helps you spot a slip before you move to the next part.

3. (a) Year 1: 2,400 ÷ 16 = 150 chairs per worker [1]. Year 2: 2,730 ÷ 21 = 130 chairs per worker [1]. (b) (130 − 150) ÷ 150 × 100 [1] = −13.3% (a fall of 13.3%) [1]. (c) The workforce rose faster than output (workers up 31.25%, chairs up 13.75%) [1], so each worker made fewer chairs. For example, new workers may be inexperienced or may share the same equipment [1]. Examiner insight: Keep the direction of change in the answer. A bare “13.3” without “fall” or a minus sign is incomplete.

4. (a) Method 1: 9 × 70 + 1 × 120 = 630 + 120 = 750 [1]. Method 2: 3 × 70 + 4 × 120 = 210 + 480 = 690 [1]. (b) Method 2, because it is cheaper for the same output [1]. (c) Method 1: 9 × 40 + 120 = 480 [1]. Method 2: 3 × 40 + 480 = 600 [1]. Method 1 is now cheaper, so the firm switches towards labour [1]. Examiner insight: A conclusion about the switch is needed in part (c). Two correct costs with no comment on the firm’s choice leave the question half answered.

5. Any two reasons, each with development, for example:

• Labour is expensive compared with machinery [1], so replacing workers lowers cost per unit [1].
• Demand is large and steady [1], so the machines are used fully and high fixed costs are spread over many units [1]. (Other developed reasons are possible, for example consistent quality that machines repeat exactly.) [4] Examiner insight: A reason becomes a full point when it is followed by “so” or “because” and a consequence. A list of four short reasons usually earns less than two developed ones.

6. (a) Production is the total output [1]; productivity is output per unit of input, for example per worker [1]. (b) Training raises skills [1], so each worker makes more per hour [1]. Better machinery or technology [1] lets each worker produce more in the same time [1]. (Other valid influences: organisation, motivation, health.) [4] Examiner insight: Name the influence and then say what it does to output per worker. “Training” alone names a factor but does not explain.

7. Price: lower [1] because stalls compete for customers, who can switch easily [1]. Quality: stalls try to keep it high or improve it to attract buyers [1]. Choice: wide, with many sellers and varieties [1]. Profit: lower, because competition holds prices down [1] and high profit would attract new stalls, which pushes profit back [1]. [6] Examiner insight: The question names four items. A response that covers only price and profit leaves out available credit, so cover each in turn and link it to the town.

8. (a) 6,300 ÷ 9,000 × 100 [1] = 70% [1]. (b) (10 − 8) ÷ 8 × 100 [1] = 25% [1]. (c) Higher prices: with few alternatives the firm can raise price, so consumers pay more [1] and may buy less [1]. Less choice: barriers keep rivals out, so consumers cannot switch to other varieties [1], and the firm has less pressure to improve quality [1]. (Other valid disadvantages are possible.) [4] Examiner insight: Two disadvantages need two separate points. Repeating “high prices” in different words is one point.

9. Economies of scale: producing on a large scale spreads costs [1], so cost per unit can fall and this may allow lower prices [1]. Research funding: high profit can pay for research and development [1], which can bring new or better products [1]. (Other valid: competing abroad, natural monopoly.) [4] Examiner insight: Advantages of monopoly are often missed. Say that the benefit is possible and depends on whether the firm passes savings on.

10. (a) L: 1,500 + 4 × 3,000 = 13,500 [1]. C: 6,000 + 1.5 × 3,000 = 10,500 [1]. (b) 1,500 + 4q = 6,000 + 1.5q, so 2.5q = 4,500 [1], q = 1,800 units [1]. (c) At 800 units: L costs 1,500 + 3,200 = 4,700 and C costs 6,000 + 1,200 = 7,200 [1]. Method L is cheaper, because 800 is below 1,800 [1]. Examiner insight: Advice must use figures from the question. A claim that “labour is cheaper for small output” without a calculation is weaker.

11. (a) Profit = (price − cost) × bottles [1]. Before: 0.10 × 60,000 = 6,000 [1]. After: 0.70 × 50,000 = 35,000 [1]. (b) (1.80 − 1.50) ÷ 1.50 × 100 = 20% rise [1]. (c) Against: price is up 20% [1] and quantity is down 16.7%, so fewer bottles are bought [1]. Cost per bottle fell 21.4%, which suggests economies of scale [1], but the saving was not passed on: profit rose from 6,000 to 35,000 [1]. There is also less choice and no rivals [1]. It depends on whether regulation or new entrants would force prices down. On this evidence consumers are probably worse off, because the price rose despite the lower cost [1]. [6] Examiner insight: Evaluation gains credit for a supported judgement that depends on conditions. Repeating the figures without stating whether consumers gain or lose does not reach a judgement.

Where marks are usually lost

• Dropping the sign or direction in a percentage change.
• Dividing by the new value instead of the original when finding a percentage change.
• Treating a rise in total output as proof that productivity rose.
• Giving a factor price effect without saying which factor becomes cheaper relative to the other.
• Listing reasons with no consequence attached.
• Writing “monopoly is bad” in an evaluation with no advantages and no judgement.
• Mixing up the effect of competition on profit.
• Using real-world claims that the question does not support, instead of the data given.

Next steps

• Read the revision notes and the study guide.
• Tick off what you know on the printable checklist and see the course hub.
• Try all free 10-minute diagnostics at /diagnostics/.
• Book a free trial class: /trial/.

Official syllabus

Cambridge IGCSE Economics 0455 syllabus for examination in 2026, version 2, published by Cambridge University Press & Assessment: sections 3.6 Firms and production and 3.8 Market structure.