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Outline how consumer sovereignty determines patterns of production in an economy and discuss the factors that influence consumer choice.

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Introduction

Outline how consumer sovereignty determines patterns of production in an economy and discuss the factors that influence consumer choice. Consumer sovereignty is an economic term for the concept that, in a free market, consumers determine the goods that are produced; this makes them "sovereign" over production in an economy. The theory of consumer sovereignty says that, while businesses and companies can produce anything they choose, if consumers do not want or need a product, it will not sell. If a product is not sold, it will not continue to be produced. ...read more.

Middle

Thus, as an economy experiences an upturn and consumer incomes rise, the production of luxury goods will increase. Similarly, the production of these items will decrease in economic downturn. There are four main factors that influence consumer choice. They are personal factors, economic factors, social factors, and marketing. Personal factors influencing consumer choice are about the consumer's own preferences, wants and needs. An individual has his/her own personal tastes or preferences and this influences the choices they make when the consume income. Personal factors also include personal wants and needs. An individual will purchase necessities rather than wants, as necessities are essential. ...read more.

Conclusion

Economic Factors include the level of income and availability of credit. And individual with a higher level of income is more likely to spend on luxury goods, than a person on a lower level of income, who might only spend their income on necessities. Marketing refers to advertisements that a consumer may be exposed to which in turn will influence a consumers choice. Advertisements use different strategies to motivate consumers to buy particular goods and services. All these factors contribute to the influencing of consumer choice. Consumers choose what products to buy, and therefore determine patterns of production in an economy. ?? ?? ?? ?? Katherine Ly- Economics ...read more.

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