Matcha is Having a Moment in Japan

EconEye Admin

1 year ago

With influencers widely promoting matcha tea and record levels of tourism in Japan, the price of matcha powder is rising. Many farmers lack the resources to upgrade to specialized machines needed for matcha production. In the future, aging matcha farmers note that they have few successors to take over.—cbc.ca

Answer the following questions to check your understanding of the story.

How do influencers and record levels of tourism in Japan change the matcha tea market?

Influencers and record levels of tourism ___________.

a) increase demand only

b) decrease supply only

c) increase demand and decrease supply

d) decrease demand

Wrong! - Do influencers and record levels of tourism change the supply of matcha tea or the demand for matcha tea?

Well Done! - Influencers and record levels of tourism increase preferences for match tea and demand increases.

Why is the price of matcha tea rising today?

a) Influencers create shortages in any market that they popularize.

b) Farmers lack resources to keep up with changing preferences.

c) Producers are holding back supplies to drive the price up.

d) Aging matcha farmers have few successors to take over.

Wrong! - With few successors to take over the aging matcha farmers, supply will decrease in the future, but why is the price of matcha tea rising today? Do we know that influencers create shortages in any market that they popularize? Why would producers hold back supplies of matcha tea?

Good Job! - With the increase in demand created by influencers and tourists in Japan and no change in supply, a shortage occurs at the original price. The shortage is eliminated as the price rises.

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