General Intelligence · Critical Reasoning

Read the passage given below and select the correct option regarding the given assumptions. Cotton acreage in India during the current year has fallen by 10% as cotton growers have moved to the cultivation of other cash crops. This is the result of the cotton glut in world markets post-September 11 and the consequent slowdown in the world economy. But this scenario brought with it benefits to one segment of the industry - yarn manufacturers - as they get higher prices for their produce. Some yarn manufacturers had stocked up low-priced cotton last year. The combined effect of all this is evident in the rise in net profits and net margins of yarn manufacturers. Assumption I: The farmers will again grow cotton next year due to the increased price of cotton yarn. Assumption II: There has been a shortage of cotton in the world market last year.