How can we eliminate a surplus in a commodity market?

Explanation

This Economics question is asking about how to get rid of a surplus in a commodity market. A surplus is when there is too much of a commodity available in the market. To eliminate it means to reduce the excess supply of the commodity.

There are different ways to eliminate a surplus in a commodity market, but the correct option is option C, which is allowing the price to fall towards equilibrium. Equilibrium is the point where the quantity supplied is equal to the quantity demanded. If there is a surplus, it means that the quantity supplied is more than the quantity demanded, so the price needs to fall to encourage buyers to purchase more and sellers to reduce their supply. This would eventually bring the market back to equilibrium.

Option A, which is increasing the quantity supplied, would only make the surplus worse. Option B, which is decreasing quantity demanded, would also not be effective as it would only reduce the demand for the commodity and may not necessarily solve the problem of excess supply. Option D, which is allowing the price to rise towards equilibrium, would be effective in eliminating a shortage, but not a surplus.

It is important to note that the elimination of a surplus may take some time and adjustments in the market. Allowing the price to fall towards equilibrium may not happen immediately, but over time, it would encourage buyers to purchase more and sellers to reduce their supply, thus reducing the surplus.

Understanding the concept of market equilibrium and the forces of supply and demand is key in solving problems related to surpluses and shortages in the market.