The correct option is
C Statements I, II and III are correct
An ecosystem is a self-sustained stable unit of nature formed by the interactions between the biotic (living) and abiotic (non-living) components that are comprised in it.
The abiotic components include water, temperature, light and soil.
The biotic components include producers, consumers and decomposers.
An ecosystem is a dynamic unit and the various components of an ecosystem work together to perform basic functions that help in the sustenance of the ecosystem.
Production of organic matter, energy flow between the various biotic components, break down of the complex organic matter into inorganic nutrients by the decomposers and cycling of nutrients are the various functional aspects of an ecosystem.
The ultimate source of energy for the majority of organisms in an ecosystem is sunlight. The producers (green plants) convert this solar energy to chemical energy through photosynthesis and produce organic matter.
Consumers are dependent on the producers for food. Primary consumers directly feed on producers whereas secondary consumers feed on the primary consumers. The secondary consumers are eaten by the tertiary consumers. A food chain represents this linear relationship, of eating and being eaten, between organisms. As organisms feed on other organisms, energy flows through a food chain in the ecosystem.
When organisms die (either plants or animals), the decomposers (bacteria and fungi) work on the dead and decaying organic matter to release the nutrients back into the environment. These nutrients are reused by the producers.
Hence, there is cycling of nutrients between the biotic and abiotic components.
For example, nitrogen (inorganic nutrient) is present in the soil. Nitrogen is absorbed in the form of nitrates by plants. This is utilised by plants to synthesise proteins and other important macromolecules. When animals feed on plants, the nitrogen becomes a part of the animal body which it utilises to synthesise proteins. Upon the death of plants and animals, the dead and decaying organic matter is degraded by decomposers and the inorganic nutrients from the plants and animals are released back to the soil. These are again reused by the plants. In this way most of the inorganic nutrients (nitrogen, potassium and calcium) are cycled in the biosphere between biotic and abiotic components.
Ecosystem is an open system where both energy and matter are exchanged with its surrounding environment. It takes input in the form of solar energy and inorganic nutrients as matter. It gives out waste (degraded) materials and heat (energy).
Hence, statements (I, II and III) are correct and statement IV is incorrect.