Economics 0455 · IGCSE · The nature of the economic problem
The nature of the economic problem — practice question
Bank deposits in Dubai climbed by 40% in 2013. An increasing number of financial companies are choosing to locate in Dubai. Expansion in its financial sector is being matched by horizontal mergers among financial companies and by workers becoming more specialised. The economy is getting wealthier, but the economic problem will never be eliminated here or anywhere else in the world.
(a)[2]
Why is the economic problem impossible to solve?
(b)[4]
Explain two reasons why worker specialisation can lower the average cost of production.
(c)[6]
Analyse how higher bank lending can lead to economic growth.
(d)[8]
Discuss whether consumers gain from horizontal mergers.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Wants increase more rapidly than resources” …