How does ‘consumer sovereignty’ determine the types and quantities of the goods produced in an economy?
Please provide the best answer for the statement.
Consumers make ‘dollar votes’ by purchasing what they are most willing and able to buy. The ‘votes’ register consumers’ wants in the economy and if the demand is enough to produce an economic profit in an industry, then the economy will increase production of that good. Conversely, if the level of demand results in a loss in that industry, the economy will decrease production of that good. Businesses and resource suppliers are not completely free to produce the goods and services they wish, but rather must face the preferences of the consumers.
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Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000
Further, during the term, you can only work part-time and earn $3,000 instead of your full-time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college? A) $10,000 B) $13,000 C) $15,000 D) $18,000
Refer to Figure 11-12. The movement from isoquant T to isoquant U depicts
A) an increase in the cost of production. B) an increase in output. C) an increase in labor usage holding capital and output constant. D) a change in preferences with regards to input usage.