making old people stretch their limits – rude!
17/09/2012 § Leave a comment
EXTENDED RESPONSE, NUMERO UNO
1. Explain which non-price determinant of demand is affecting the market.
Demographic change among Japan is what is affecting the market in this story. A non-price determinant of demand is a factor that affects the demand of a market of goods that does not involve changing the price of the good. If this story were represented by a demand graph, for example, the demand for health foods in Japan, then the overall demand would shift to the right because with an increase in the number of older individuals in Japan’s society comes an increase in the demand for health foods (which are popular with the elderly). The demographics of Japan are what affects the market and would cause a shift (to the right) in the demand for health foods (and other goods).
2. Evaluate the economic possibilities of Japan’s industries/firms as the population ages.
As Japan’s population ages, it’s likely that Japan’s industries and firms will start to target most of its products towards the elderly. This means that instead of producing goods that will satisfy a younger generation or the working generation, industries will adjust to making goods that older people would be willing to buy. On one hand, this could risk a drop in total spending – if the majority of goods available on the market are only there for old people, then everyone under that age won’t be able to and won’t spend as much. On the other hand, if senior citizens in Japan really are starting to show an increase in their spending and the baby boom generation from the ’40s are reaching senior citizenship, then the total spending may just help to strengthen Japan’s economy as the money is cycling – industries are providing the right goods for the spenders, the spenders (old people) are constantly feeding the industries with money, and money is moving all throughout Japan’s economy, giving it the boost it needs to slowly climb its way back to the top of all economies.