Cambridge IGCSE Economics 0455 Paper 1 Mock Test 3 (Online, with Solutions)

About 0455 Paper 1 Mock Test 3

Third full 0455 Paper 1 practice test: 30 new questions in 45 minutes covering PES, minimum wages, mergers, productivity, inflation, poverty, population and the balance of payments.

It has 30 questions to finish in 45 minutes, the same time as the real 0455 Paper 1, which is sat on Wednesday 4 November 2026, afternoon (zone 4). There is one mark per question and no negative marking.

Topics in this mock

• The basic economic problem3
• The allocation of resources6
• Microeconomic decision makers7
• Government and the macroeconomy8
• Economic development2
• International trade and globalisation4

Worked examples (not from this test)

Try each one, then open the solution. They use the same methods as the questions in the mock.

1. The basic economic problem
   What is the reward for each factor of production?
   Show answer and working

   1. Each factor of production earns a reward for its use.
   2. Land earns rent, labour earns wages, capital earns interest and enterprise earns profit.

   Answer: land: rent; labour: wages; capital: interest; enterprise: profit

2. The allocation of resources
   At the equilibrium price of $8, 500 units are bought and sold. The government sets a maximum price of $6, where 650 units are demanded and 380 are supplied. What is the result?
   Show answer and working

   1. A maximum price below equilibrium creates excess demand.
   2. Shortage = quantity demanded − quantity supplied = 650 − 380 = 270 units.
   3. Only 380 units are actually bought, so some buyers go without, and queues or black markets may appear.

   Answer: a shortage of 270 units

3. The allocation of resources
   Demand for a product has a PED of −0.5. The firm raises its price by 20%. What happens to the quantity demanded and to revenue?
   Show answer and working

   1. % change in quantity = PED × % change in price = −0.5 × 20% = −10%.
   2. Demand is inelastic, so the price rise is bigger than the fall in sales.
   3. Total revenue rises (for example 100 units × $10 = $1000 becomes 90 units × $12 = $1080).

   Answer: Quantity falls by 10% and revenue rises.

4. Government and the macroeconomy
   A government receives $380 billion in revenue and spends $420 billion. What is its budget position?
   Show answer and working

   1. Budget balance = revenue − spending = 380 − 420 = −40.
   2. Spending is greater than revenue, so there is a budget deficit of $40 billion, usually financed by borrowing.

   Answer: a budget deficit of $40 billion

5. Economic development
   Country X has an HDI of 0.92 and country Y has an HDI of 0.48. What does this suggest?
   Show answer and working

   1. HDI combines life expectancy, education and income per head on a scale from 0 to 1.
   2. A higher value means people live longer, are better educated and have higher incomes.
   3. HDI is an average and does not show how evenly income is shared.

   Answer: Living standards are higher in country X.

6. International trade and globalisation
   Give one benefit and one cost to a host country of a multinational company (MNC) opening a factory.
   Show answer and working

   1. Benefits include jobs, tax revenue, training and new technology.
   2. Costs can include profits sent to the home country, competition that closes local firms, and pressure on the environment.

   Answer: Benefit: jobs and new technology. Cost: profits may be sent abroad.

More practice: Mock Test 1 · Mock Test 2 · Mock Test 4 · All 0455 Paper 1 mock tests, exam facts and FAQ

Written and checked against the Cambridge International syllabus by the The Vector Academy economics team. Last updated 29 October 2026.