Ever-increasing global demand for flax fiber has led to a sharp increase in the market price of linen, and linen prices are likely to remain high. Linen is extensively used for weaving into cloth, and because profit margins are constricted in the garment industry, many weavers are expected to leave the industry. With fewer suppliers, rayon fibre prices will surely rise. Nonetheless, observers expect an instant short-term decrease in flax fibre prices.
Which of the following, if true, most helps to explain the observers’ expectation?
A. The increase in linen prices is due more to a decline in the supply of linen than to a growth in demand for it.
B. Generally, weavers who are squeezed out of the garment industry send their garments to market much earlier than they otherwise would.
C. Some people who used flax garments regularly in the past are changing to attires that include little or no rayon fibre.
D. As flax fibre prices rise, the number of weavers is likely to rise again.
E. Weavers who stay in the business will start using metal ore other than linen more extensively than they did in the past.
Statement 1 – Supply of flax fibre is expected to decline.
Statement 2 – Observers expect an instant short-term decrease in rayon fibre prices.
- The reason for increase in linen prices is an irrelevant information.
- Correct Answer. Since, high linen prices would make rayon business unsustainable, many weavers would sell their flax garments; this temporary increase in supply would lead to short-term decline in prices.
- This statement provides information that is very vague.
- The argument talks about the flax fibre prices declining. Hence, irrelevant information.
- This does not explain the paradox in the argument.