Question : One of the features of a free market economy is
Option 1: active state intervention
Option 2: public ownership of factors of production
Option 3: rationing and price control
Option 4: consumer's sovereignty
Correct Answer: consumer's sovereignty
Solution : The correct option is consumer's sovereignty .
A key principle of a free market economy is consumer sovereignty. It means that, depending on their preferences and purchasing behavior, consumers in a market economy ultimately control what commodities and services are produced, and in what amounts. Because they are aware that these are the items and services that will be in demand and bring in profits, producers and sellers are incentivized to create them in a free market. Because of the competition it spurs, consumers can expect higher quality, reduced pricing, and improved features from producers.
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