Cambridge IGCSE Economics 0455/12 is the May/June 2026 Paper 1 (Multiple Choice), variant 2. It has 30 questions worth one mark each, lasts 45 minutes and is sat by every 0455 candidate. The questions cover the whole syllabus, and five of them needed working from figures, from a PED calculation to an unemployment rate that included a group outside the labour force. This guide gives the official answer for every question, the topic it tested and the working for each calculation. The paper and its mark scheme are free on the Tutopiya Learning Portal.

For an overview of both 0455 papers from this series, see IGCSE Economics 0455 May/June 2026 past papers: what came up and how it was marked.

0455/12 at a glance

Syllabus area	Questions	Number of questions
The basic economic problem	1–4	4
The allocation of resources	5–9	5
Microeconomic decision makers	10–16	7
Government and the macroeconomy	17–24	8
Economic development	25–26	2
International trade and globalisation	27–30	4
Total		30

Each correct answer scores one mark, so the total is 30. The front cover states that a mark is not deducted for a wrong answer, so never leave a question blank.

Answer key and topic for every question

Question	What it tested	Answer
1	Example of a free good	C
2	Reward for the factor of production capital	A
3	Opportunity cost from a leisure and earnings diagram	A
4	Which aim is a macroeconomic aim	B
5	Cause of a rightward shift in demand for tea	C
6	Cause of an extension in supply	D
7	Price rise needed to cut cigarette consumption, from PED	D
8	Type of good that does not cause market failure	B
9	Effect of lowering a maximum price on a medicine	C
10	Function of money shown by the price of rice	B
11	Saving as 10% of disposable income	C
12	Non-wage factor in a lawyer becoming a teacher	A
13	Likely cause of rising labour productivity	B
14	What a table of factor inputs and output shows	B
15	Output with the lowest average total cost	C
16	Feature of a competitive market but not a monopoly	A
17	International role of a government	B
18	Unemployment measure that conflicts with lower inflation	D
19	Classification of a 20% and 45% income tax	B
20	Example of monetary policy	D
21	Effect of spending on education and training	A
22	When quarterly real GDP shows a recession	D
23	Unemployment rate from labour market data	A
24	Year deflation started	C
25	What is not a cause of absolute poverty	D
26	What is greater in a low-income economy	D
27	Disadvantage of national specialisation	C
28	Change not associated with globalisation	C
29	Description of a fixed exchange rate system	D
30	Immediate effect of a current account deficit	D

What the paper tested, topic by topic

The basic economic problem (Questions 1–4)

• Opportunity cost from a diagram (Question 3): the line runs from 24 hours of leisure (and $0) to $120 of earnings (and no leisure). Position Y is 8 hours of leisure and $80; position X is 12 hours of leisure and $60. Moving from Y to X gains four hours of leisure, and what is given up is $20 of earnings. Option C, four hours of leisure, is what the person gains, not what they sacrifice.
• Free goods (Question 1): sunshine has no opportunity cost, because no scarce resources are used to provide it. Headphones “given away” and bottled water both used resources to produce, so they are economic goods even if the buyer pays nothing extra.
• Factor rewards (Question 2): capital earns interest. Rent goes to land, wages to labour and profit to enterprise.
• Macroeconomic aims (Question 4): an inflation target for the whole economy is a macroeconomic aim. A tax on one product, one firm’s profit target and one union’s members are all microeconomic.

The allocation of resources (Questions 5–9)

• PED calculation (Question 7): PED = % change in quantity demanded ÷ % change in price, so −0.5 = −10 ÷ % change in price, and the price must rise by 20%. Dividing the other way gives the 5% distractor.
• Shift in demand (Question 5): D2 lies to the right of D1, so demand for tea has increased. Coffee is a substitute for tea, so a rise in its price shifts demand for tea to the right. Sugar is used with tea, so a rise in its price would reduce demand, and a smaller population or lower wages would do the same.
• Extension in supply (Question 6): a movement up along the supply curve comes only from a rise in the good’s own price. Changes in costs of production shift the whole curve.
• Market failure (Question 8): a free good does not cause market failure. Demerit, merit and public goods are all classic sources of it.
• Maximum price (Question 9): both P1 and P2 sit below the equilibrium price, so the cut from P1 to P2 moves further down the demand curve and quantity demanded increases. Excess demand gets bigger, not smaller, which rules out A.

Microeconomic decision makers (Questions 10–16)

• Disposable income (Question 11): disposable income is total income minus deductions: 19 000 + 1000 − 5000 − 3000 = $12 000. Saving 10% of that gives $1200. Option A is the disposable income itself, and B is the two deductions added together.
• Average total cost (Question 15): add fixed and variable cost, then divide by output. At 10 units, 700 ÷ 10 = $70; at 20, 1000 ÷ 20 = $50; at 30, 1200 ÷ 30 = $40; at 40, 2000 ÷ 40 = $50. The lowest is at an output of 30.
• Economies of scale (Question 14): to double output from 100 to 200, every input rises by only half (land 6 to 9, labour 8 to 12, capital 4 to 6). Output grows faster than inputs, so the cost per unit falls inside the firm: economies of scale. The table is about one firm’s own inputs, which rules out the external options.
• Labour productivity (Question 13): the index rose from 100 to 109, and a more skilled workforce raises output per hour. Higher employment on its own does not raise output per hour worked.
• Money and jobs (Questions 10 and 12): pricing rice at $0.50 and then $0.75 uses money as a unit of account, a common measure of value. Holiday entitlement is a non-wage factor; the other three options are all about pay.
• Market structure (Question 16): many sellers can exist in a competitive market but never in a monopoly, which has one dominant seller.

Government and the macroeconomy (Questions 17–24)

• Unemployment rate (Question 23): the labour force is everyone employed, self-employed or unemployed and actively seeking work: 25 + 5 + 3 = 33 million. The rate is 3 ÷ 33 × 100 = 9.09%. The long-term sick are not in the labour force, so leave them out. Dividing by the employed alone (3 ÷ 25) gives the 12% distractor.
• Recession (Question 22): real GDP fell from $101bn to $99bn in quarter 3 and to $98bn in quarter 4. A recession is two consecutive quarters of falling real GDP, so it had happened by the end of quarter 4.
• Deflation (Question 24): deflation means a negative inflation rate. The rate was 4% in 2019, 2% in 2020 and −2% in 2021, so deflation started in 2021. Inflation falling from 4% to 2% in 2020 is disinflation, not deflation.
• Policy recall (Questions 19 and 20): a higher rate for higher earners is progressive taxation, and changing interest rates is monetary policy. The other options in Question 20 are fiscal or trade measures.
• Policy conflicts (Question 18): raising benefits puts more spending power into the economy, which can add to inflation. Travel grants, training and job information help the unemployed without that conflict.
• Supply-side spending (Question 21): more education and training raise international competitiveness, so the current account deficit is likely to shrink. Real GDP, HDI and labour productivity would be expected to rise.
• International role (Question 17): negotiating free trade deals for exporters is the international role. The others are domestic aims.

Economic development (Questions 25–26)

• Absolute poverty (Question 25): state benefits reduce poverty rather than cause it. Unemployment, low literacy and poor health are all causes.
• Low-income economies (Question 26): the average family has more children. A bigger service sector, longer life expectancy and more capital-intensive production are features of high-income economies.

International trade and globalisation (Questions 27–30)

• Specialisation (Question 27): a country that specialises depends on a narrow range of products, so it is more exposed to external shocks such as a fall in world demand for them.
• Globalisation (Question 28): more effective tariff barriers work against globalisation. Movement of labour, longer supply chains and wider use of technology all go with it.
• Exchange rates (Question 29): a fixed exchange rate fixes the currency’s value against another currency. An inflation target (option A) is monetary policy, not an exchange rate system.
• Current account deficit (Question 30): the mark scheme’s answer is the unemployment rate. A deficit means more spending is going on imports relative to the country’s exports, so less is spent on domestic output.

Where the marks are on 0455/12

• Government and the macroeconomy carried 8 marks, the most of any area, and three of its questions (22, 23 and 24) were about reading a table of figures.
• Microeconomic decision makers added 7, including two of the five calculations (Questions 11 and 15) and the factor-input table in Question 14.
• Those two areas together were half the paper (15 of 30 marks). Allocation of resources (5), the basic economic problem (4), trade and globalisation (4) and development (2) made up the rest.
• Five questions needed working from figures: 3, 7, 11, 15 and 23. Each takes a minute or two with a calculator and a clear method.
• Six questions hinged on a negative or a precise term: “not” in Questions 8, 16, 25 and 28, and the exact meanings of extension (6) and deflation (24).

How to self-mark 0455/12

1. Check each answer against the key above or the official mark scheme. Count one mark per correct letter.
2. Tag every wrong answer by syllabus area, using the at-a-glance table, to see which area is costing the most.
3. Tag it by reason too: knowledge (for example, not knowing that the long-term sick are outside the labour force), misread (missing “not” in Question 25 or “opportunity cost” in Question 3) or calculation (dividing the wrong way in the PED question, or taking 10% of total income instead of disposable income in Question 11).
4. Redo every calculation you got wrong with the formula written first, then the figures, then the answer with its unit.
5. Revise definitions first, because most of this paper is recall of precise terms, then practise the calculation types that went wrong.

Sit 0455/12 as a timed mock

You have 45 minutes for 30 questions, one and a half minutes each. Use two passes: answer the recall questions first, mark any that need a calculation or a table, then come back to them.

Block	Questions	Time
Basic economic problem and allocation of resources	1–9	12 minutes
Microeconomic decision makers	10–16	10 minutes
Government and the macroeconomy	17–24	11 minutes
Development, trade and globalisation	25–30	7 minutes
Second pass and check the answer sheet	–	5 minutes

The first two blocks take longest because they hold four of the five calculations, plus the factor-input table in Question 14.

Other May/June 2026 0455 papers

• 0455 Paper 22 (Structured Questions)

Practise and download

• Download 0455/12 and its mark scheme on the Learning Portal →
• All 0455 May/June 2026 papers: overview and marking patterns
• Try a free IGCSE Economics quiz

Need help with a 0455 topic? Book a free trial lesson with an IGCSE Economics tutor →

Frequently asked questions

What topics were on 0455 Paper 12 May/June 2026? +

All six areas of the syllabus. The basic economic problem had 4 questions, allocation of resources 5, microeconomic decision makers 7, government and the macroeconomy 8, economic development 2 and international trade and globalisation 4.

How many marks is 0455/12 and how long is it? +

It has 30 multiple choice questions, one mark each, for a total of 30 marks. You have 45 minutes, you may use a calculator, and no mark is deducted for a wrong answer.

What was the answer to the unemployment rate question on 0455/12? +

A, 9.09%. The labour force is the employed, self-employed and unemployed: 25 + 5 + 3 = 33 million. The 3 million unemployed divided by 33 million is 9.09%. The 2 million long-term sick are not in the labour force, so they are left out.

What was the answer to the PED question on 0455/12? +

D, 20%. With a price elasticity of demand of −0.5, the percentage change in quantity demanded is half the percentage change in price, so a 10% fall in consumption needs a 20% rise in price.

How many questions on 0455/12 2026 needed a calculation? +

Five needed working from figures: Questions 3 (opportunity cost from a graph), 7 (PED), 11 (saving from disposable income), 15 (lowest average total cost) and 23 (the unemployment rate). Four more, Questions 13, 14, 22 and 24, asked you to interpret a table.

Where can I download 0455/12 May/June 2026 and its mark scheme? +

Both are free to download and print on the Tutopiya Learning Portal, on the Cambridge IGCSE Economics 0455 past papers page.

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