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A traditional weaving industry declines. Some residents blame changing consumer preferences, while others point to rising raw-material costs. Which evidence would best help distinguish these explanations?

Answer and explanation

Correct answer: Trends in product demand, selling prices, input costs and business closures

Demand and production costs influence businesses through different mechanisms. Examining sales, prices and costs over time can help assess their relative contributions, including whether both factors were involved.

Related tags

Competing ExplanationsTraditional IndustryProduction CostsConsumer Demand

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