Introduction
Consumer expenditure on a good is the price of the good multiplied by the quantity purchased, so any change in price or quantity affects total expenditure. To understand the effect of rising pork prices on feather shuttlecocks, it is necessary to examine the supply-side changes in the market for ducks and geese, which provide the feathers used in shuttlecock production.
Impact of rising pork prices on feather shuttlecocks
An increase in pork prices will cause farmers to shift their resources toward raising pigs instead of ducks and geese, as these are in competitive supply. Competitive supply refers to a situation where two or more goods require the same resources for production, so that an increase in the production of one good reduces the resources available for the other. Here the resources, such as land, feed, and labour, needed to raise ducks and geese are diverted to raising pigs, which are more profitable due to higher pork prices.
As farmers raise more pigs, the supply of ducks and geese decreases, represented by a leftward shift in the supply curve from SS0 to SS1. At the initial price P0 there is a shortage of ducks and geese, as quantity demanded exceeds quantity supplied, creating upward pressure on price. This raises the price of ducks and geese from P0 to P1.
Since feather shuttlecocks are produced using feathers from ducks and geese, the higher cost of raising these birds translates into higher factor input costs for shuttlecock manufacturers. The supply of feather shuttlecocks therefore decreases, shifting the supply curve leftward from SS0 to SS1, and the price of feather shuttlecocks rises from P0 to Pi.
Given that feather shuttlecocks are generally inexpensive and occupy a small proportion of consumers' income, their demand is likely to be price-inelastic. Price-inelastic demand means a percentage increase in price leads to a smaller percentage decrease in quantity demanded. So while the quantity demanded falls from Q0 to Q1, the reduction is relatively small compared with the price increase, resulting in an increase in total consumer expenditure on feather shuttlecocks, from 0P0AQ0 to 0PiBQ1, as the higher price more than offsets the smaller fall in quantity.
Impact on rackets
Feather shuttlecocks and rackets are complementary goods, used together in activities like badminton. When the price of one complement increases, it tends to reduce the demand for the other, so the rise in the price of feather shuttlecocks reduces the demand for rackets.
With higher shuttlecock prices, consumers may reduce their overall badminton activity, lowering the demand for rackets. This is represented by a leftward shift in the demand curve for rackets from DD0 to DD1. At the initial price P0 there is a surplus of rackets, as quantity supplied exceeds the new quantity demanded, exerting downward pressure on price and causing it to fall from P0 to P1. The fall in both the price and quantity demanded of rackets leads to a decrease in total consumer expenditure on rackets, from 0P0AQ0 to 0P1BQ1.
Conclusion
The increase in pork prices creates a ripple effect through the market for ducks and geese, ultimately raising the price of feather shuttlecocks through higher input costs. Despite the price increase, total consumer expenditure on feather shuttlecocks rises because of their price-inelastic demand. Meanwhile the rise in shuttlecock prices reduces the demand for complementary rackets, lowering both their price and quantity and so reducing total expenditure on rackets.