ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Detailed Solution. The correct answer is Capitalism. Consumers’ Sovereignty: In a capitalist economy, the consumer has freedom of choice.

Detailed explanation-2: -For example, in a free market, consumers have the highest levels of consumer sovereignty. The consumer is free to buy any commodity and in whatever quantities his likes. However, in a command economy, the state or central government decides what to produce.

Detailed explanation-3: -The idea that consumers influence production decisions is called consumer sovereignty. Consumers effectively “vote” for the goods they want with their spending power, causing firms to respond to consumer preferences and produce the goods they demand.

Detailed explanation-4: -The countries with the greatest economic freedom tend to be those that encourage entrepreneurialism and protect private property. These policies encourage laissez-faire economics, another term for a free market structure.

Detailed explanation-5: -An example of consumer sovereignty is when companies bring in consumers to test products or listen to pitches for new ideas. It gives the consumer power in the decision making process before products go into production.