In the mid-1990's fashion trends toward loose-fitting, casual cotton clothing drove up the price of domestic cotton. In response, existing domestic farmers switched over from growing soybeans and rice to growing cotton. What best explains the effect of these events?
1. Supply of cotton shifted to the right, price declined and quantity increased.
2. Supply of cotton shifted to the left, price increased and quantity decreased.
3. Demand and supply for cotton shifted to the left, quantity increased and price decreased.
4. Demand for cotton shifted to the right, price increased, supply curve shifted to the right, and price decreased in the longer run.