Question

What is consumer sovereignty?
1. It is the right of consumers to lodge complaints against fraud and misconduct.
2. It is the control exercised by consumers’ preferences on the production of goods.
3. It is the ability of a producer to respond to consumers’ needs and preferences.
4. It is the recall of consumer products deemed unfit for consumption.

Answer 1

The correct answer is 2. Consumer sovereignty is the control exercised by consumers' preferences on the production of goods.

Answer 2

The consumer sovereignty is the control exercised by consumers' preferences on the production of goods (Option 2). According to this theory or economic concept, the consumers have the power to judge what goods as well as services are produced. The consumers in their role of citizens decide on the production of goods and services which is determined by the consumers' demand. As a result, the firms will respond to consumers' preferences and will produce the goods considering the consumers' demands.