Question

In an economy people have the freedom to buy or not to buy the goods offered in the market place, and this freedom to choose what they buy dictates what producers will ultimately produce. The key term defining this condition is ____________.

• A. Economic power of choice
• B. Consumer sovereignty
• C. Positive economy
• D. Producer sovereignty

Answer 1

The correct option is B Consumer sovereignty

"In an economy people have the freedom to buy or not to buy the goods offered in the market place, and this freedom to choose what they buy dictates what producers will ultimately produce." This is known as principle of consumer sovereignty. In a free market economy the allocation of resources is determined by the consumer preference.