In the market place entrepeneurs compete for the dollar of the consumers. They are willing to interchange goods or sevices for money. The success or failure of an entrepreneur depends on how consumers approve or disapprove the products or services offered by entrepreneurs. If the product or service is seen as good or high quality then that entrepreneur will surely have high demand and will continue in the market place. If the product or service is seen as bad or bad quality then that entrepreneur will disappear.
Consumer sovereignty operates in a marketplace to determine the success or failure of an entrepreneur through the idea of primacy of consumption over production.
Explanation:
The idea of primacy of consumption over production was introduced by Adam Smith (Scottish economist and philosopher) in 1776 . He believed that the interests of the consumer are more important than those of the producers because the sole purpose of production is consumption. They are interrelated, of course, one cannot exist without the other. However, for an entrepreneur to be successful, they need to respect and study people's needs (demands) because these will determine what needs to be produced, and in turn, boost the success of the producer. Consumers have the power to decide (sovereignty) how the marketplace must operate.
Answer: The way scarce resources get distributed within an economy determines the type of economic system. There are four different types of economies; a traditional economy, a market economy, command economy, and a mixed economy. Each type of economy has its own strengths and weaknesses.
