Why is the consumer said to be sovereign?

Why is the consumer said to be sovereign?

Consumer Sovereignty is the willingness, ability and freedom of the consumer to largely influence the
fundamental economic decisions of resource allocation. The consumer?s willingness and ability to spend on goods and services is an indication to producers (firms) of what, how and for whom to produce through resource allocation and relocation (reallocation). The consumer exercises this power of influence and determination through price mechanism, such that what is produced is what consumers want and for which they are willing and able to pay a price.

Thus, although firms make decisions on what, how and for whom to produce, it is only in response to consumers' effective demand through a price bidding process, and so the consumer is said to be sovereign.

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Wilfykil answered the question on February 4, 2019 at 09:54

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