Exam Technique

For Lower Sixth Devotees:

To improve on your performance on exam questions.

The Music Compact Disc Market

Part (a) : demand was price INelastic. Mentioned in paragraph 2 is the fact that when price fell, so did sales revenue. If it were price elastic then sales revenue would have increased (the increase in quantitiy would have compensated for the fall in price). Price falls and because the amount sold does not change that much, the loss of revenue per CD is not outweighed by the increase in number of CDs.

Part (b) : most spotted the fall in demand, but there was also an increase in supply as supermarkets, like the unmentionable, enter the market. WATCH OUT for this in exams: they might expect you to spot more than one change.

Part (c) : easy to do OK on this; harder to do well. To do well, you must evaluate. Evaluation requires you to start sentences with phrases such as "However, this might not be the case", "On the other hand", or "To some extent". With this type of question, you would be best to discuss the magnitude of the change. So, for example, you might write that if there were a recession this would lead to a fall in demand as consumers' real disposable income has fallen. however, the change is likely to be only a small one as expenditure on CDs is likely to be only a small part of people's total expenditure.

Part (d) : Again, most marks are for evaluative commments. Tower records are likely to have such a small market share that there closure is unlikely to make much of an impact on the market for CDs.

Great answers discussed how Tower Records' exit maight act as a signal to other firms to exit the market too.