1.

0 INTRODUCTIONS

The recent declaration by the Malaysian government to end chicken subsidies and introduce a
floating price mechanism that will take effect on November 1st has sparked a complex discussion
about the potential effects on consumers, farmers, and the poultry industry as a whole. This
regulatory change is expected to provide the industry a boost and assist customers by increasing
rivalry among chicken suppliers, which could lead to more competitive and reasonable prices. The
head of UPSI's Economics Department, Assoc Prof Dr Zainizam Zakariya, highlights the expected
annual savings of more than RM4 billion from the removal of subsidies and stresses the need for
continuous supervision to minimize any negative effects, especially predatory pricing strategies
that may disproportionately impact smaller businesses. (New Straits Times, Leong, 2023)

Prime Minister Anwar Ibrahim's historic decision to remove price caps on chicken and eggs
is part of Malaysia's entire financial plan for 2024 and represents a calculated move to address
shortages and volatility in the prices of essential food items. The move is consistent with the
government's RM3.8 billion in subsidies since February 2022, indicating a move away from
controlling pricing and guaranteeing supplies. Even though this is a step in the right direction,
given the importance of chicken and eggs as readily available protein sources, worries about
potential affordability issues for households remain. These concerns are shared by economists
and industry professionals. (The Starits Times, Hassan, 2023)

This talk explores the many facets of Malaysia's decision to remove chicken subsidies and
how it may affect consumer access, industry competitiveness, and the country's overall economic
environment as this historic policy shift takes shape. The analysis dives into the nuances of this
strategy shift, from the expected benefits for consumers in the form of competitive pricing to the
requirement for careful control in the face of possible market distortions. Furthermore, Anwar's
focus on revealing particulars of the subsidy withdrawal raises the suspense and level of scrutiny
for the story as it develops. In order to guarantee a thorough grasp of this, this investigation
seeks to disentangle the complexity underlying the elimination of chicken subsidies by providing
insights into its motivations, potential advantages, and potential obstacles. (The Straits Times,
Hassan, 2023)

2.0 QUESTION 1 : COMPARISON AND CONTRAST BETWEEN SUBSIDIES AND PRICE

CEILING

2.1 Subsidy
Definition of subsidy.

Definition of Subsidy A grant or gift of money can take various forms. One such form is a sum of
money that was historically granted by the British Parliament to the crown and raised through
special taxation. Additionally, money granted by one state to another also falls under this
definition. Furthermore, it encompasses grants by governments to private individuals or
companies with the aim of supporting enterprises considered advantageous to the public. In
essence, financial assistance provided through these means serves different purposes, ranging
from historical parliamentary allocations to interstate financial support and government grants for
promoting beneficial enterprises. (Merriam-Webster)

Furthermore, subsidy is a direct or indirect payment, economic concession, or privilege

granted by a government to private firms, households, or other governmental units in order to
promote a public objective. Identification of a subsidy is often complicated because of the variety
of subsidy instruments, the multiplicity of the objectives they are designed to serve, and the
complexity of their effects. (Britannica)

Moreover, subsidy is meant to supplement a particular adverse or burdensome economic

condition for individuals and businesses. Subsidies may be provided by both governments and
businesses. Governments may provide subsidies in the form of tax cuts and unemployment and
welfare benefits. A business may subsidize the operations of a newly acquired business until it
becomes profitable. Subsidies are meant to be a temporary relief. Some common subsidies are
tax benefits for electric car owners and payments to farmers. Electric car owners receive a tax
break due to the low emissions of electric cars, which promote social benefit. Farmers may receive
subsidies for not farming specific land because crop yields will result in a loss for the farmer due
to depressed prices. (The Realized Team, 2022)

The incidence of a subsidy:

The economic incidence of a subsidy indicates who is made better off by the subsidy. In contrast,
the legal incidence indicates who, by law, the subsidy is intended to help. In the diagram below,
the subsidy per unit is A – B, and the new quantity consumed is Q1.

Subsidy curved
However, when the subsidy increase then the supply also increase, supply curve shifts to the right
from S to S1. The subsidy per unit is P1P2. Quantity increase from Q to Q1. The price decrease
from P to P1, Hence, although the intention of the subsidy may be to reduce the price to the
consumer by the full amount of the subsidy, the producer gets some of the benefit in terms of
extra revenue that they can keep. The gain to the producer is C – P per unit and the total gain to
the producer is CAFP. The overall cost of the subsidy to the government is the area, CABP1.

(EconomicsOnline, 2020)

Subsidy benefit consumer and producer diagram

Purpose of subsidy:

Subsidies play a pivotal role in the economic development of a country, and in Malaysia, they
serve to enhance the affordability of goods and services, particularly for a substantial portion of
the population facing economic challenges. These subsidies, implemented by both central and
state governments, contribute to narrowing the economic disparity between different segments
of society. It's noteworthy that while government subsidies provide crucial support, they also come
with significant financial costs for the state. For example, when the government sells fertilizers to
farmers at prices below their actual cost, it covers the economic gaps incurred. This results in a
substantial subsidy expenditure for Malaysia, with projections indicating that the government's
total fertilizer subsidy for the current fiscal year 2022-23 is expected to reach RM215 billion, and
the food subsidy bill is likely to hit RM394 billion. (Team, 2022)

Advantages of Subsidies:

Governments implement various economic strategies to address critical issues and promote overall
societal well-being. One key focus is on managing inflation and reducing prices, particularly in the
face of rising global crude oil prices, often through subsidies on essential commodities like fuel.
Another imperative is preventing the long-term decline of vital industries, such as fishing and
farming, essential for sustaining a population. Governments may offer subsidies to these sectors,
ensuring their continued functionality. Additionally, supporting emerging industries through
subsidies facilitates their growth and contribution to economic development. To enhance citizens'
access to essential goods and services like water, food, and education, governments employ
incentives such as tax credits or direct financial support. These measures are often directed toward
markets with positive externalities, fostering a greater supply of goods and promoting the overall
welfare of the population

Disadvantages of Subsidies.

While subsidies offer certain advantages, such as fostering a greater supply of goods, they are
not without drawbacks. One significant disadvantage is the potential for a shortage of supply.
Despite the intention to stimulate production through lowered prices, this approach may lead to
an unexpected surge in demand that producers struggle to meet, resulting in shortages and
subsequent price increases. Additionally, measuring the success of subsidies poses a considerable
challenge. Although subsidies are intended to be effective and beneficial, quantifying their success
proves difficult, making it challenging for the government to accurately report their impact.
Furthermore, the financial burden of subsidies falls on the general population and corporations,
as the government typically raises funds for these initiatives through higher taxes. This aspect
raises concerns about the indirect costs borne by individuals and businesses to support the
subsidization of industries. (Team, 2023)

2.2 Price Ceiling

Definition of price ceiling.

A price ceiling occurs when authorities set a maximum price for a good or service, intending to
prevent prices from going above or below the equilibrium determined by supply and demand.
Higher price ceilings are often found to be ineffective, leading to unintended consequences. In
particular, price ceilings play a crucial role in markets like the housing rental sector, influencing
rental rates and overall market dynamics. (Price, 2024)

Moreover, a price ceiling is a government-imposed restriction on the maximum price of a

good or service. Its purpose is to shield consumers from exorbitant prices, ensuring affordability.
Effectiveness hinges on setting the ceiling below the equilibrium price determined by market
forces. This strategic placement prevents prices from becoming overly expensive, striking a
balance between consumer protection and market efficiency. (Team, 2023)

Besides, a price ceiling is a maximum price that a producer can charge for their good or
service, often implemented by governments to ensure that essential goods and services are
affordable for consumers. Examples include food, rent, and energy products, which may become
too expensive for some consumers if left to the free market. Price ceilings manipulate the
equilibrium point between supply and demand, preventing the price of good from increasing
beyond a certain point. This can create a disincentive for producers to supply more of the good,
as they may not be able to make a sufficient return on investment. For instance, in the case of
rent control, landlords may be limited to a low rate of return, such as 2 percent, rather than the
10 percent they might otherwise earn. This can discourage new investors and construction firms
from supplying new rental units to the market. (Boyce, 2021)’

The incidence of price ceiling:

Price ceiling in supply and demand curved

The diagram shows that before the price ceiling, competing market forces were initially at
equilibrium at a price of P1 and quantity of Q1. When a price ceiling is introduced at P2 this
disrupts the market as a change in price will affect the supply and demand in the market. Demand
increases in Q3, however, supply is reduced in Q2. There is now a gap (Q3-Q2) between the
quantity that the consumers are willing to demand and what the producers are willing to supply.
This is known as a shortage. (Price Ceilings: Definition, Effects, Graph & Examples, 2019)

Purpose of price ceiling:

Governments implement price ceilings to cap maximum commodity prices, aiming to guarantee
affordability for the public. While such measures are intended to protect consumers, prolonged
use can result in unintended consequences. Instances of black marketing may arise as sellers seek
to circumvent regulated prices, and disruptions in the supply chain may occur due to reduced
 incentives for producers. Achieving an effective regulatory balance is crucial to prevent these
issues and maintain a fair and functional market. (Price, 2024)

Advantages of a price ceiling:

The implementation of price ceilings offers several advantages, primarily focused on maintaining
affordability and fairness within the market. In the short term, these ceilings serve to keep goods
and services reasonably priced for consumers, preventing sellers from exploiting circumstances to
charge exorbitant prices. During periods of temporary shortages causing inflation, price ceilings
act as a safeguard, ensuring that prices remain within an affordable range until the supply catches
up with demand. Additionally, by keeping prices at acceptable levels, price ceilings stimulate
consumer demand, fostering increased spending that can positively impact the overall economy.
Another crucial benefit is the prevention of price gouging, particularly in emergency or disaster
situations, where sellers might attempt to unfairly capitalize on essential goods or services. Price
ceilings serve as a protective measure, inhibiting sellers from escalating prices to unreasonable
levels and thereby ensuring continued consumer access to vital products.

Disadvantages of a price ceiling:

Despite their intended benefits, price ceilings come with notable disadvantages that can impact
both producers and consumers. Placing price ceilings below the equilibrium point, where supply
and demand naturally meet, aims to ensure affordability for consumers. However, this affordability
often results in higher demand, creating a conundrum for producers. The imposed ceiling restricts
their ability to set prices at levels that cover production costs, potentially leading to losses. In
response, producers may either reduce or halt production, resulting in shortages of goods or
services. To illustrate, consider a taco vendor facing escalating flour prices; if unable to cover
costs under the price ceiling, they may cease taco production altogether. Another drawback is the
potential compromise in product or service quality. Businesses may resort to cost-cutting
measures to maintain profitability at lower prices, potentially leading to the use of cheaper
materials or a reduction in product reliability. In the taco example, this could manifest as a vendor
opting for inferior-quality ingredients, diminishing the overall appeal of their tacos. Additionally,
price ceilings can inadvertently give rise to a black market. Excess demand, coupled with legal
suppliers unable to meet it, prompts consumers to seek products from illegal sellers willing to defy
the price ceiling. In the taco scenario, this means consumers may still access their desired tacos,
albeit at inflated prices from illicit sources. These disadvantages underscore the complexities and
challenges associated with implementing price ceilings in a market.

(What Is a Price Ceiling and How to Find It | SurveyMonkey, 2022)

3.0 QUESTION 2 : BENEFIT THAT CONSUMERS GOT WHEN SUBSIDY BEEN

REMOVED?
Market efficiency

Market efficiency refers to a market where prices represent all relevant financial information
about an underlying asset or security. The more information that all market players will have,
the more efficient the market is. It, thus, provides an equal opportunity for buyers and sellers
to execute trades and make profits while minimizing transaction costs. The concept is
connected with the market efficiency hypothesis, which is based on asset price changes due
to the availability of relevant information. Since all traders have access to the same data, they
cannot predict prices and outperform the market. Therefore, it plays a significant role in
running the asset trade cycle in highly competitive financial markets. (WallStreetMojo, Pathak,
2022)

There are a number of advantages that customers should expect from the removal of
chicken subsidies. The removal of price caps and subsidies gives chicken farmers more
freedom to change prices in response to changes in the market and to offset higher production
expenses. This change makes the market more responsive, encouraging competition and
maybe increasing industry efficiency in the poultry sector. As manufacturers invest in
innovation, consumers may gain from increased product quality and more options. Although
there are initial worries about possible price increases, the data indicates that the cost of
producing chickens has leveled out, keeping market prices below the ceiling. Furthermore,
continuous egg subsidies support price stability for this vital protein source, guaranteeing that
consumers will always have access to reasonably price options. (The Malaysian Reserve, Zukri,
2023)

Resource allocation

Resource allocation is the process of strategically selecting and assigning available resources
to a task or project in support of business objectives. In the context of accounting, allocation
deals with the assignment of people and their skills to projects, also known as engagements.
The essence of optimal resource allocation for any accountancy firm is matching the right
people, with the right experience, qualifications, and skills with the right client and task, at
the right time. (Dayshape, Fraser, 2021)
 Through the wise distribution of resources, consumers stand to gain from the RM100
million monthly savings that result from the elimination of price controls and subsidies on
chicken. Allocating these monies to welfare and socioeconomic programs, such as cash
assistance, demonstrates a dedication to enhancing the general welfare of the populace.
Additionally, a focus on sustainable agricultural methods is suggested by the use of savings
to support the poultry business, especially by providing incentives to small and medium-sized
breeders and community farmers. The switch from open to closed poultry systems is in line
with modernization initiatives and could improve the quality of the final product. Although
there are worries about possible price hikes, the government has taken proactive steps to
lessen the impact on customers, especially in the case of Agro Madani and Rahmah Sales,
which are meant to maintain competitive rates. (The Star, Dato Seri Anwar Ibrahim, 2023)

Industry sustainability

The only goal of economic growth is to increase sales and profits. The term "economic
sustainability" describes strategies intended to foster a country's or company's long-term
economic growth while simultaneously controlling the environmental, social, and cultural
ramifications of its operations. It is about striking a balance between the effects on people
and the environment and profit-making and economic progress. (Prysmian Group Magazine,
Fabrizio Rutschmann, 2021)

With effect from November 1, 2023, the elimination of price caps and subsidies for
chicken has the potential to benefit consumers, especially in terms of the viability of the sector.
This action promotes a more sustainable chicken industry by giving producers of chicken the
freedom to modify pricing in response to changes in the market. Gaining more independence
will enable producers to make investments in technologies and ecologically beneficial practices
that will support sustainability over the long run. Although the government continues to
subsidize grade A, B, and C eggs, indicating its support for this vital source of protein, the
changes in the chicken industry are anticipated to be strictly watched to guarantee ethical
behavior. The chicken business can become more resilient and environmentally conscientious
if it can adjust to market forces naturally, which would ultimately benefit consumers by
offering a sustainable. (MIDF Research, Genevieve Ng Pei Fen, 2023)
Diversified product offerings

Product diversification is a business strategy used to ensure survival or growth and expansion.
It entails creating and marketing a new line of products or product division, service, or service
division that uses either the same or completely different sets of knowledge, skills, machinery,
etc. Product diversification can happen at the corporate or different business levels. An
organization may use this tactic to enter a new market where it already has a foothold in the
business world. Within the corporate context, it describes entering a new market outside the
reach of the company's current offerings. (WallStreetMojo, Jain, 2020)

According to Budget 2024, the elimination of chicken subsidies will help customers by
providing a wider range of products. The lack of pricing limits may lead to greater rivalry
among local producers, which presents a chance for the poultry business to grow and develop.
This growth may result in a wider variety of chicken items to suit various consumer tastes. In
an attempt to stand out in a crowded market, regional producers might launch novel and
specialized chicken products, giving customers additional options and possibly better quality
products. Customers stand to benefit from a more dynamic and varied assortment of poultry
products as the sector adjusts to market dynamics without subsidies, creating a marketplace
that better suits their different requirements and tastes. (Yahoo News, Morden, 2023)

Transparent pricing

The ease with which customers can access comprehensive pricing and market data about
various products is referred to as price transparency. Customers can use it to evaluate prices
and make wise decisions. It is therefore a major factor influencing market efficiency.
Information about the ask price, trading volume, and bid price of financial assets, goods, and
services is typically sought for by players in financial markets. It influences their actual supply
and demand by assisting them in realizing their true worth. However, the cost of such
knowledge is incurred. As a result, marketplaces that provide inexpensive, easily accessible
information are regarded as effective and free. (WallStreetMojo, Ahmed, 2022)
 With clear pricing systems, the removal of chicken price limits and subsidies, which
takes effect next month, is expected to benefit consumers. Customers should anticipate a
better knowledge of the true cost of producing chickens as a result of the government's
decision to let chicken farmers modify pricing in response to market conditions. Because
of the increased market trust brought about by this transparency, customers are able to
make better-informed purchases. Subsidies remove the need for artificial interventions,
promoting a more efficient and competitive market. Prices that are in line with supply and
demand will probably reflect production costs more accurately for customers, which will
help to ensure fairand open pricing. This change not only provides consumers with more
information, but it alsofosters a market where real market forces dictate pricing. (The Edge
Malaysia, Kathy Fong, 2023)

4.1 QUESTION 3 : THE WAYS FLOATING OF CHICKEN PRICES ENCOURAGE

COMPETITION AMONG PRODUCERS, WHOLESALERS AND RETAILERS

Market responsiveness refers to a company's ability to quickly adapt to changing market

demands, which is a potentially critical skill for market pioneers (Atuahene-Gima et al., 2005).
The third determinant of market pioneering investigated in this paper, strategic learning self
efficacy, is included based on theoretical suggestions that learning can assist pioneers in
overcoming uncertainties associated with navigating novel domains. Learning behaviour
improves the firm's ability to incorporate new market information into product development
and commercialization, thereby improving the firm's problem-solving capacity (March, 1991).

In general, higher manufacturing investment is required for quality differentiation.

Production cost sensitivity to quality can have a significant impact on quality levels across
channels (Ha et al., 2016). In the case of Tesla, they are "shifting all of its sales from stores
to the Internet" in order to launch the Model 3. Furthermore, quality can be defined broadly
as "any product attribute that increases consumers' satisfaction and willingness to buy"
(Karaer & Erhun, 2015). When a manufacturer decides to produce and distribute multiple
products with varying quality levels, the consumer's willingness to buy, and thus customer
demand sensitivity to the quality level, is also critical. For example, in China's air conditioner
industry, the number of major brands has decreased from around 400 to less than 10 due to
a "quality war" (Wang et al., 2017).
 We use knowledge from technology adoption theories to investigate what influences
consumers' perceived price sensitivity or price thresholds of new technological products.
The theory of planned behaviour (TPB) is one of the baseline models that has been used to
explain consumers' willingness to pay (Sánchez et al., 2018) across a wide range of
exploratory technology adoption models (see, for example, Venkatesh et al., 2003). which is
defined as a variable of behavioural intention that captures the generated value. Other studies
have investigated the effect on price sensitivity (PS); however, given the role of PS as a latent
variable in the framework of technology adoption, the results are ambiguous (Bhutto et al.,
2022, Brando and Gonçalves da Costa, 2021, Hsu et al., 2017) and do not allow for concrete
pricing strategies to be drawn.

4.2 THE IMPACT CONSUMER ACCESS TO AFFORDABLE CHICKEN

With increased competition and globalisation of businesses, aligning marketing and production
decisions has become critical to manufacturing firm profitability. Indeed, the marketing plan
specifies the quality and price of the offered products, and the production facility must then
meet the market demands generated by the product offer. As a result, considering production
limits and constraints is critical to preventing an excellent marketing plan from becoming a
failure (Tang, 2010). In practice, however, production constraints are frequently overlooked.
Dr. Karl Kempf, Director of Decision Technologies at Intel, for example, reports that pricing
decisions are frequently made without taking production capabilities into account (Pekgün,
Gryphon, & Keskinocak, 2008).

According to Sinha and Verma (2020), consumers' spending is consistent with their
perception of the use of a specific sales promotion technique. According to a review of the
literature, most studies focused on identifying various potential determinants of consumers'
attitude and behaviour responses to sales promotion, such as sales promotion experience
(Chandon et al., 2000), price promotion (Drechsler et al., 2017), sales promotion technique
preferences (Jee and De Run, 2013), and branding (Van Heerde, Gupta, and Wittink, 2003).

5.1 QUESTION 4 : POTENTIAL FINANCIAL SAVINGS ASSOC PROF DR ZAINIZAM

ZAKARIYA SUGGEST COULD BE ACHIEVED ANNUALLY BY DISCONTINUING
CHICKEN SUBSIDIES
The elimination of chicken subsidies provides an opportunity to redirect funds to research
and development in Malaysia's poultry industry, as suggested by Herniza Roxanne Marcus
of UiTM Sabah. Allocating these savings to research and development aims to improve chicken
breeds, increase domestic supply, and reduce reliance on imports. The funds could also be
used for socioeconomic initiatives in Sabah, benefiting small businesses and critical
infrastructure. Nordin Thani of the Consumers Front of Sabah proposes using funds to
encourage small farmers to raise chickens. Both experts emphasise the importance of careful
planning to ensure equitable distribution and avoid exploitation in the local chicken production
chain. (Dayang Norazhar 2023)

The Malaysian government expects to save RM100 million per month by ending
chicken subsidies and price controls on November 1. These savings will be used to support
socioeconomic initiatives and the poultry industry, including small breeders and farmers.
Despite the removal of subsidies, the government assures that chicken prices in rural areas
will remain around RM10.40 per kilogramme, with competitiveness measures in place. If prices
suddenly rise, the government is ready to monitor, import, and potentially impose controls.
The decision to end chicken subsidies is intended to reduce leakage to foreigners and high-
income groups, while egg subsidies and controls will remain in place, subject to periodic
review. (Mail 2023)

Assoc Prof Dr Romzi Ationg of Universiti Malaysia Sabah suggests reinvesting the
RM3.8 billion savings from ending chicken subsidies in critical initiatives. Cash assistance
programmes for struggling individuals, building schools and hospitals in rural areas, upgrading
clinics, and assisting SMEs with financial aid and resources are among the proposed
allocations. Following the government's decision to end long-standing chicken subsidies, Dr.
Romzi emphasises the importance of strategic investment in education, healthcare, and
economic growth in order to make a tangible difference in public welfare and citizens' lives.
(The Star Online 2023)

5.2 THE PRIMARY BENEFICIARIES OF THESE SUBSIDIES BEFORE THEIR

TERMINATION AND THEIR REASONS

To address a chicken supply shortage, Malaysia's Agriculture and Food Industries Ministry
(MAFI) is speeding up subsidy payments to poultry breeders. MAFI intends to send more
officers to states to expedite application reviews and encourages breeders to apply as soon
as possible. The government set a chicken price ceiling until June 5, raising concerns about
profit margins. Despite the fact that a substantial subsidy of RM729.43 million was offered,
only RM50 million was claimed. To stabilise domestic production, Prime Minister Ismail Sabri
Yaakob announced a temporary halt to chicken exports beginning June 1. MAFI is also
addressing industry concerns, such as rising production costs, disease infections, and adverse
weather conditions affecting the supply of chickens. (CNA, 2022)

To address the market's egg shortage, the government is providing subsidies to

chicken breeders and egg producers who are experiencing financial losses, primarily due to
high raw material costs. Datuk Seri Ahmad Hamzah, Deputy Agriculture and Food Industries
Minister, expects the subsidies to be restored within four months, avoiding any negative
impact on the public. Since February, the government has been providing egg subsidies to
the industry, and this measure has been extended until December to ensure producer survival
and a stable, affordable egg supply. (The Star Online, 2022)

6.0 QUESTION 5 : THE IMPACT OF TECHNOLOGICAL CHANGE ON THE

EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY OF CHICKEN

Equilibrium price curved

In the chicken market, equilibrium is like a perfect balance point where buyers and sellers
agree. When technology changes, it can shake things up. Imagine this balance on a graph,
where the demand and supply lines meet. If new technology makes chicken farming more
efficient or cheaper, it could lead to a new equilibrium. The market clearing price, where
everyone is satisfied, might shift. This connection between technology and equilibrium reflects
the dynamic nature of the chicken industry. In simple terms, it's about finding a fair price
where everyone in the chicken business is happy, and this idea links with microeconomics,
exploring how individual choices, influenced by technology, shape prices in the chicken
market. (Toppr-Guides, 2018)

Equilibrium quantity curved

In the chicken market scenario, envision a situation where the diagram shows a price (P2)
below the equilibrium. This implies that, at this price, the amount of chicken people want is
more than what producers are supplying, resulting in a shortage (gap between Q2 and Q1).
Faced with this shortage, technological changes can play a role. If new technology enhances
chicken production efficiency, producers might respond by increasing supply and adjusting
prices to meet the heightened demand. As prices rise, there's a shift along the demand curve,
leading to a decrease in the quantity of chicken demanded. This adjustment process continues
until the market reaches a new equilibrium at P1, where there's no longer a shortage, and
supply equals demand. This dynamic interaction between price, demand, and supply
showcases how technological advancements can influence the chicken market's pursuit of
equilibrium, ensuring a balanced and effective marketplace. (5 December 2019 by Tejvan
Pettinger)

Impact on the equilibrium price.

Decrease in supply curved

Applying the described economic concepts to the chicken market, assuming no immediate
change in the supply of chicken, an inward shift in demand (from D1 to D2) on a more vertical
(inelastic) supply curve would primarily result in adjustments to the equilibrium price. In this
scenario, where the supply of chicken is relatively fixed over the considered time period, the
market would move from an initial equilibrium (at the intersection of the original supply curve
and D1, say at point A) to a new equilibrium (at the intersection of the vertical supply curve
and the new demand curve, D2, say at point B). The inelastic supply implies that most of the
adjustment to this new equilibrium would occur in the change in price, with a notable decrease
in price due to the reduced demand. However, the impact on the quantity exchanged might
be relatively smaller compared to the change in price. This highlights how the elasticity of
supply influences the distribution of adjustments between price and quantity when there is an
inward shift in demand for chicken.

7.0 QUESTION 6 : Refer to the above statement, give two (2) examples of different
quality of chicken offered by the producer and the price.

Example 1 : Chickens raised for meat are known as broiler chickens. Broiler chickens, which
are typically hybrids of breeds intended for fast growth, are common in factory farms all over
the world. (THL,2024)

To get an idea of what these creatures go through, let's track the life of a broiler chicken.In
a hatchery, where countless numbers of eggs are nurtured and hatched, a broiler chicken
begins her existence. Her parents are housed in different breeding facilities, so she will never
get to see them.She will be put on a conveyor belt to receive her vaccinations by spray or
injection when she is just a few hours newborn. After that, she will be dropped on a conveyor
belt into a shipping crate that is roughly the size of a big desk drawer. Her container will be
loaded onto a truck together with thousands of other chicks and driven to the "grow-out
facility." She's destined to live much of her little life in this place.Barns that grow out are
usually. (THL,2020)

Even though a few decades ago, chickens were bred for their eggs as well as their meat, there
are now varieties specifically designed for each purpose. Chickens grown as broilers, or fowls
to be killed for their flesh, develop enormously fast. In the United States, these chickens are
typically killed about seven weeks old, having reached a weight of roughly 6.5 pounds by then.
Contrarily, laying hens usually live for 72 weeks or less before their productivity declines and
they are put to death. At their busiest, they might lay up to 300 eggs annually. (DANI SHER ,
2023)

The nutritional requirements of growing broilers are taken into account in a number of ways.
When you bring the chicks home, you may use medicated chick starter to avoid coccidiosis.
To strengthen the immune system of twenty-five broiler chicks, one hundred pounds of
crumble or starting meal is sufficient. The birds can switch to grower crumble or pellets after
two weeks; these foods typically include 15-20% protein. For the final seven to ten days prior
to harvest, a finishing feed may be given. (KENDALL KUNELIUS , 2024)

In Malaysia, the average cost of producing broiler chickens was found to be RM6.53 per
kilogramme (kg). According to Chief Statistician Datuk Sri Dr. Mohd Uzir Mahidin, the farm
price of chicken per kilogram might range from RM6.86 to RM7.84, assuming five, ten, and
twenty percent of profits from the production cost. According to Mohd Uzir, the two largest
expenses in the production cost of broiler chickens were the purchase of day-old chicks (16%)
and poultry feed (65.1%).The varieties of chicken feed also affect how much it costs. The
average cost of poultry feed for broiler chicken was RM132.04 per 50 kg for the Starter type
and RM129.71 per 50 kg and RM126.96 per 50 kg for the Grower and Finisher kinds,
respectively. (THE SUN , 2022)
Example 2 : Raising egg-laying poultry birds for the purpose of producing commercial eggs is
known as layer poultry farming. A unique species of hen, layer chicks must be nurtured from
the moment they become one day old.

An older female chicken reared and raised primarily for her eggs is called a layer chicken, or
layer. Given that they produce eggs more frequently than other breeds of chicken, such
broilers, layer hens are particularly well-liked in the commercial egg business.A high nutritional
level is necessary for layers to produce an above average number of eggs, as well as eggs
that are large, heavy, flavorful, and of high quality.Layers start to lay about one egg every 22
hours at the age of 18 to 19 weeks. The layers are rotated out and begin to lay less often
after they are 72–78 weeks old. (LIVETEC SYSTEM , 2022)

Birds that lay eggs typically live in cages their entire lives. While some broiler breeders are
kept in similar conditions, the majority are raised in pens with up to two thirds of the floor
covered in slats or on litter floors. The feeding and watering area for egg-strain pullets raised
in cages cannot be greatly altered; still, routine inspections are required to guarantee that
feed and water are consistently provided.( BRUCE STEWART-BROWN , 2023)

The average cost of poultry feed for layer chicken was RM131.57 for starter type and
RM117.08 for grower and finisher types per 50 kg and 50 kg, respectively. In Malaysia, the
average price for a day-old chick (layer) was recorded at RM2.12 and RM3.32. According to
Mohd Uzir, the production costs of the chicken eggs were composed of 96.9% direct costs
and 3.1% indirect costs, of which the cost of poultry feed accounted for 76.2% of the
expenses and the prices of utilities, salaries, and wages for 15.8%."The cost of purchasing
day-old chicks accounted for 2.2% of the total cost of egg production," he stated. (THE SUN
2022)