Export demand and profits linkage: steel producers posted considerable profit last year while many Asian countries imported large quantities from India — select the correct cause–effect relationship
Verbal Reasoning
Cause and Effect
Difficulty: Easy
Choose an option
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AStatement I is the cause and statement II is its effect
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BStatement II is the cause and statement I is its effect
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CBoth the statements I and II are independent causes
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DBoth the statements I and II are effects of independent causes
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EBoth the statements I and II are effects of some common cause
Answer
Correct Answer: Statement II is the cause and statement I is its effect
Explanation
Given data
- I: Most steel-producing companies made considerable profit last financial year.
- II: Many Asian countries imported huge quantities of steel from India.
Concept/Approach
Higher export demand at remunerative prices raises revenue and profits. Thus II provides a direct causal driver for I.
Step-by-step reasoning1) Imports by Asian countries → elevated sales volume/price.2) Elevated revenue minus costs → higher profits.
Verification/Alternative
I causing II makes little sense; profits are an outcome, not a driver of foreign demand.
Common pitfalls
- Attributing both to an unspecified common cause when a clear demand->profit link exists.
Final AnswerStatement II is the cause and statement I is its effect.