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Question

Difficulty: HardCause and Effect Reasoning

Read the two statements given below regarding recent industrial and market developments in the regional textile sector:

Statement I: Multiple apparel manufacturing units in the industrial zone declared temporary shift suspensions and a significant reduction in overall garment production output.
Statement II: Local spinning and weaving mills experienced an acute shortage of raw cotton, resulting in an unprecedented spike in yarn procurement costs.

Which of the following statements best describes the logical relationship between Statement I and Statement II?

  1. A
    Statement I is the cause and statement II is its effect.
  2. Statement II is the cause and statement I is its effect.Answer
  3. C
    Both statements I and II are independent causes.
  4. D
    Both statements I and II are effects of independent causes.
  5. E
    Both statements I and II are effects of a common cause.

Answer

Statement II is the cause and statement I is its effect.
In the textile industry supply chain, spinning mills supply yarn to apparel manufacturing units. A shortage of raw cotton leading to a sharp rise in yarn procurement prices (described in Statement II) represents an input cost shock and supply bottleneck. This directly forces apparel manufacturers to cut down production and suspend factory shifts (described in Statement I). Thus, Statement II is the primary cause and Statement I is its logical effect.

Step-by-Step Solution

1
Analyze the event described in Statement I.
Statement I describes apparel manufacturing units reducing garment production and suspending shifts (an operational slowdown).
Establishing the nature of the first phenomenon in the textile value chain.
2
Analyze the event described in Statement II.
Statement II describes a raw cotton shortage and an unprecedented spike in yarn procurement costs.
Establishing the nature of the second phenomenon affecting input supply.
3
Evaluate the causal link between Statement I and Statement II.
Yarn is the primary raw material for apparel manufacturing. An acute shortage and price spike in yarn directly inflates production costs and restricts raw material availability, forcing garment factories to scale down output and suspend shifts.
Testing whether one event logically and temporally precedes and produces the second event.

Key Concept

Direct Cause and Effect in Supply Chains
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Topics

Cause and Effect Reasoning

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