Question:easy

Given below is a pair of events I and II. You have to decide their nature of relationship. Assume that the given information is correct and final.

I. Prices of toys in the market have gone down
II. Government has reduced import duty on toys.

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Ask which event is a deliberate decision and which is only a market outcome. The deliberate decision is the cause.
Updated On: Jul 17, 2026
  • I is the main cause and II is the main effect
  • I is effect but II is not the main cause
  • II is the main cause and I is the main effect
  • II is an effect but I is not the main cause.
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The Correct Option is C

Solution and Explanation

A quick way to settle a cause and effect pair is the initiative test. Ask which of the two events is somebody's deliberate decision and which is only an outcome that the market throws up. A deliberate decision by an authority is almost always the cause, because nobody passes a policy just because a price moved.

  1. I is the main cause and II is the main effect: This asks us to believe that toy prices dropped first and the government then responded by cutting import duty. Governments cut duty to make goods cheaper. Cutting it after prices have already dropped would defeat the purpose. The order is backwards.
  2. I is effect but II is not the main cause: This half accepts the truth. Yes, the price fall is an effect. But it then rejects the one explanation sitting right in front of us. Import duty is a direct component of the cost of an imported toy, so removing part of it feeds straight into the shelf price. There is no reason to hunt for some other hidden cause.
  3. II is the main cause and I is the main effect: Apply the initiative test. Reducing import duty is a conscious policy act of the government, taken on its own. The price fall is what the market does in response. Lower duty means lower landed cost, lower landed cost means the importer and retailer can quote a lower price, and competition pushes them to actually do it. The chain runs from II to I.
  4. II is an effect but I is not the main cause: Calling a government policy decision an "effect" of shop prices misreads how policy works. A budget or notification reducing duty is an independent act, not a reaction produced by a price chart.

So the correct choice is (C). The policy move is the cause, the price movement is the effect.

Let's summarize:

  • Between a policy action and a market outcome, the policy action is the cause.
  • Import duty is part of the cost of an imported good, so cutting it lowers the selling price.
  • Always test both directions and keep the one with a real mechanism behind it.

Option (C) is the answer: the duty cut caused the price fall.

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