Item 7"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:Multiple Choicederived demand.external costs and benefits.consumer sovereignty.the invisible hand.
Question
Item 7"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:Multiple Choicederived demand.external costs and benefits.consumer sovereignty.the invisible hand.
Solution
This statement best describes the concept of consumer sovereignty. In a market economy, consumers dictate what goods and services are produced based on their demands and purchasing power. This is often referred to as 'voting with their dollars'. If consumers demand more of a certain product and are willing to pay for it, more resources will be allocated to produce that product.
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