Answer:
The correct answer is: increase; decrease.
Step-by-step explanation:
The world price of cotton rises substantially. An increase in price will cause the supply to increase as price level and supply are directly related. In order to increase the supply of cotton, the firms will need more labor. This will cause the demand for labor to increase in the cotton-producing firms.
As the price of cotton, the cost of inputs for textile firms will increase. This will increase the cost of production for the textile-producing firms. This increase in cost will cause the supply to decrease. This will cause the demand for labor to decline as well.