Consider the following statement and choose the option that follows.
Statement: The government has increased the minimum support price (MSP) for crops.
Conclusions:
I. Farmers will benefit from better earnings.
II. Food prices will decrease.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is: Only I follows.
Why is Conclusion I correct? The Minimum Support Price (MSP) is the guaranteed price that the government pays farmers for their crops. When the government increases it, farmers receive more money when they sell their produce. This directly improves their income (earnings). Therefore, Conclusion I is a direct and logical consequence of the statement.
Conclusion II: When the government increases the support price for crops, the cost of grains and crops in the market increases. As a result, food prices in the open market may rise or remain stable, but they will not fall at all. Therefore, Conclusion II is completely illogical.