In a country, the equilibrium price of wheat was determined at Rs. 100 per kg. as part of agricultural price support program and the government set the minimum support price at Rs. 120. At this new price, the supply is much greater than demand creating a situation of excess supply. This excess supply can lead to fall in prices. Government wanted to help the farmers but ended up creating a problem. What should government do now?

Nothing can be done by government Should buy the surplus at price lower than minimum support price Buy the surplus at minimum price fixed by it Force the private players to purchase at the MSP.

Buy the surplus at minimum price fixed by it

In the case of agricultural support, to prevent price from falling because of excess supply, government needs to buy the surplus at the predetermined price