Question

Why is consumer sovereignty considered an advantage?

a) because consumers have complete control over the market
b) because consumers are able to make purchasing decisions
c) because consumers are able to make production decisions
d) because consumers help determine what is produced

Answer 1

Consumer sovereignty is the idea that consumers help determine what is produced in the market, leading to more choice and better prices for goods and services, benefiting both consumers and businesses.

Step-by-step explanation:

Consumer sovereignty is considered an advantage because it reflects the power of consumers to determine what is produced in the market. Through their purchasing decisions, consumers signal to businesses what goods and services are in demand, prompting these firms to adjust their production to suit consumer preferences. This market mechanism ensures that consumers have significant choice among a wide variety of goods and services, leading to better and less expensive products for them. Businesses that respond effectively to consumer demand often see increased profits, which in turn can raise the income of their employees. The dynamic nature of this system promotes economic freedom, incentivizes competition among producers, and results in a more efficient allocation of resources, whereby the collective pros typically outweigh the losses to the nation overall.