Q1. [1]
If companies decide to import cotton from other countries, what will be its impact on domestic cotton cultivation ? Choose the most appropriate option :
I. Less profitable
II. More profitable
III. The price of domestic cotton will decrease
IV. The price of domestic cotton will increase
- (A) Only I and IV are correct.
- (B) Only I and III are correct.
- (C) Only II and III are correct.
- (D) Only II and IV are correct.
Previously asked in CBSE board exam
2026 32/3/1 Q31
Generated by claude-sonnet-4-6 · 2026-06-15 06:58 · grounding rag
Model Answer
(B) Only I and III are correct.
When companies import cotton from other countries, cheaper foreign cotton floods the market, causing the price of domestic cotton to decrease, making domestic cotton cultivation less profitable.
Explanation
- Imports increase supply in the domestic market → prices fall (as seen in the Chinese toys example in the textbook).
- Falling prices hurt domestic producers → cultivation becomes less profitable.
- Options II and IV are opposite/incorrect — imports do not make domestic production more profitable or increase domestic prices.
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