CAIE IGCSE Economics 3.5. Firms & production Question Bank
Practise how firms choose inputs, production methods and productivity improvements using tables, firm contexts and cost decisions.
- Syllabus
- 2027–2029
- Course
- Economics 0455
Exam points
- link demand for labour or capital to product demand, wages, productivity and availability
- compare labour-intensive and capital-intensive methods using costs, output and skills
- calculate or interpret labour productivity from output and worker data tables
Covered syllabus points
3.5. Firms and production question 1
Free goods and economic goods are consumed in Poland. In 2020, demand for both economic goods and factors of production increased in Poland. For example, Polish consumers demanded more football shirts and the Polish government increased its spending on housing for the country's population.
Explain two influences on demand for factors of production.
3.5. Firms and production question 2
Washington State is the state which grows the most apples in the US. In 2019, apple production increased in Washington State but the market was in disequilibrium. Apple farming is a labour
intensive industry because apples are picked by hand. The market for apples in the US is competitive.
Analyse how labour-intensive production can benefit an economy.
3.5. Firms and production question 3
Read the source material carefully before answering Question 1.
Source material: Will Germany continue to be a strong economy?
Germany is a country with a trade surplus and a high GDP per head. It also has a budget surplus (government tax revenue greater than expenditure), a high HDI and a low inflation rate.
In recent years, German firms have exported a higher value of goods and services. This has contributed to the growth of world trade, caused partly by a fall in transport costs. A relatively large number of German firms produce both in Germany and in other countries, helped by better communications.
Germany is a major producer and exporter of luxury cars. Demand for luxury cars was influenced in 2018 by increases in incomes in Germany and abroad, a rise in the price of US luxury cars and, in some countries, a fall in the price of petrol.
Improvements in the quality of education and information on job vacancies have made it easier for workers to change jobs in Germany. This greater ability to change jobs has helped to reduce unemployment and to increase the country's output.
Fewer workers in the German car industry are now members of a trade union. As shown in Table 1.1, trade union membership in Germany has declined in recent years.
Table 1.1 selected data on the German labour market 2013-2016
A challenge facing Germany is its ageing population. The effect of an older labour force is uncertain. It may mean firms become reluctant to invest in new technology, but a shortage of young workers may encourage firms to buy more capital goods.
Germany's population may fall and there will soon be fewer Germans aged under 30 than over 60 unless immigration continues at a relatively high rate. Immigration might increase both the country's labour force and its government's spending on education.
Discuss whether or not an ageing labour force will reduce productivity.
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