E.2.4.



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E.2.4 Recognize that consumers ultimately determine what is produced in a market economy (consumer sovereignty)
Consumer sovereignty

In unrestricted markets, those with [|income] or [|wealth] are able to use their [|purchasing power] to motivate producers as what to produce (and how much). Customers do not necessarily have to buy and, if dissatisfied, can take their business elsewhere, while the profit-seeking sellers find that they can make the greatest [|profit] by trying to provide the best possible products for the price (or the lowest possible price for a given product). In the language of cliché, "he who pays the piper calls the tune." To most [|neoclassical economists], complete consumer sovereignty is an //ideal// rather than a //reality// because of the existence -- or even the ubiquity -- of [|market failure]. Some economists of the [|Chicago school] and the [|Austrian school] see consumer sovereignty as a reality in a [|free market] economy without interference from government or other non-market institutions, or anti-market institutions such as [|monopolies] or [|cartels]. That is, alleged [|market failures] are seen as being a result of non-market forces. However, [|it has also been argued] (e.g., by Goutam U. Jois) that even a "pure" market system violates the consumer sovereignty norm.
 * Consumer sovereignty** is a term which is used in [|economics] to refer to the rule or [|sovereignty] of purchasers in [|markets] as to production of [|goods]. The term can be used as either a norm (as to what consumers should be permitted) or a description (as to what consumers are permitted).

http://en.wikipedia.org/wiki/Consumer_sovereignty