What will happen in the market for cotton as a result of a severe drought?
A) The demand for cotton will decrease, causing the equilibrium price to fall and equilibrium quantity to fall.
B) The demand for cotton will increase, causing the equilibrium price to rise and equilibrium quantity to rise.
C) The supply of cotton will decrease, causing the equilibrium price to fall and equilibrium quantity to fall.
D) The supply of cotton will decrease, causing the equilibrium price to rise and equilibrium quantity to fall.

Question

Quizplus · Accepted Answer

A severe drought will reduce the supply of cotton as it affects cotton production. With a decrease in supply, the equilibrium price of cotton is likely to rise, and the equilibrium quantity will fall due to higher prices. Therefore, D is the best choice.

What Will Happen in the Market for Cotton as a Result