The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of
A) derived demand.
B) consumer sovereignty.
C) the invisible hand.
D) market failure.

Question

Quizplus · Accepted Answer

Consumer sovereignty means that consumers have the power to determine what goods and services are produced and how resources are allocated based on their purchasing decisions. In a market economy, businesses will produce the goods and services that will sell the most, which is ultimately determined by consumers through their dollar votes.

The Dollar Votes of Consumers Ultimately Determine the Composition of Output