Economics · 2005 · May · Paper 3 · HL · Question paper
EconomicsQuestion paper2005HLMay
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This question paper is listed under Economics in the 2005 examination archive. Its catalogue level is HL. The catalogue session is May. The information below helps you identify the document before opening the complete PDF. Subject, year and session labels come from the archive catalogue; the original cover remains the reference if a label differs. A file is not automatically suitable for your current syllabus simply because its subject name matches.
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IB DIPLOMA PROGRAMME
PROGRAMME DU DIPLÔME DU BI
PROGRAMA DEL DIPLOMA DEL BI
M05/3/ECONO/HP3/ENG/TZ0/XX
ECONOMICS
HIGHER LEVEL
PAPER 3
Thursday 19 May 2005 (morning)
INSTRUCTIONS TO CANDIDATES
Do not open this examination paper until instructed to do so.
Answer three questions.
Use fully labelled diagrams and real-world examples where appropriate.
2 hours
2205-5103 11 pages
22055103
M05/3/ECONO/HP3/ENG/TZ0/XX
2205-5103
– 2 –
Answer three questions. Each question is worth [20 marks].
1. Study the extract below and answer the questions that follow.
European Union (EU) to investigate high prices for compact disks (CDs)
Fears that the world’s big five music companies operate a collusive oligopoly to keep CD prices
artificially high have prompted the European Commission to investigate big industry mergers.
Although no strong evidence has been found to date that Europeans are paying far too much for their
CDs, there is a strong belief that there is more than enough evidence to warrant a full enquiry. The
European companies under investigation are the EMI Group, Bertelsmann, Warner Music, Sony
Corp and Universal (“the big five”) together with five online retailers and 13 traditional retailers.
The Commission is particularly interested to find out why there are such wide differences in CD
prices within Europe and why music costs are higher in Europe than in the USA. It also wants to
know why a CD costs 30 % more than a cassette for exactly the same content. The issues emerged
when a massive merger between EMI and Warner Music was reviewed and rejected on the grounds
that it would harm competition due to the economies of scale it would create (barriers to entry).
A consumer association survey looked at a best selling album of the female singer Britney Spears
which cost an average of US dollars (US $) 10.77 in US music stores compared to US ($) 12.08
in the European Union. In Italy, the album costs US ($) 14.16, while in London it costs US
($) 12.26.
The Commission is investigating the big five companies and a similar investigation in the USA
concluded that American consumers paid US ($) 320 million more for their CDs than they should
File information
Subject
Economics
Document type
Question paper
Year
2005
Session
May
Level
HL
Paper
3
Examination zone
Not labelled in the archive
Language
Not labelled in the archive
File size
299 KB
Pages
11
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