What happens to tobacco prices at auction?

Tobacco prices at auction are influenced by a support price, which is the minimum price established by governments or regulatory bodies to stabilize the market and protect farmers. This means that under normal circumstances, tobacco will not be sold for less than this support price, ensuring that growers receive a baseline income for their product.

Option C reflects this concept correctly, as it highlights the importance of the support price in maintaining a floor on prices during auctions. The existence of this support price helps to prevent market volatility to a certain extent by providing a safety net for producers.

While tobacco prices can indeed fluctuate around this support level due to demand, quality, and regional factors, the key takeaway is that they will not fall below the established support price in regulated markets. This understanding is essential for those involved in the tobacco trade, as it affects investment decisions and market strategies.