The market system is said to be characterized by "consumer sovereignty." This is because
A) a sovereign government determines which consumer goods will be produced.
B) the prices of consumer goods are regulated by a sovereign government.
C) ﬁrms must match their production decisions to the consumers' choices.
D) consumer goods are considered to be more important than capital goods.

Question

Quizplus · Accepted Answer

Consumer sovereignty refers to the idea that consumers have the ultimate power in determining which products and services are produced because they vote with their dollars. In a market system, firms must respond to the wants and needs of consumers in order to be profitable, which means that they must match their production decisions to the consumers' choices. This is why C is the best answer. A, B, and D are incorrect because they all involve some form of government intervention rather than relying on the market and consumer choices.

The Market System Is Said to Be Characterized by "Consumer