The Market System Is Said to Be Characterized by "Consumer

question 84

Multiple Choice

The market system is said to be characterized by "consumer sovereignty." This is because:

• A) A sovereign government determines which consumer goods will be produced
• B) The prices of consumer goods are regulated by a sovereign government
• C) Firms must match their production decisions to the consumers' choices
• D) Consumer goods are considered to be more important than capital goods

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Definitions:

Variable Cost

Charges that directly correspond to changes in the amount of business activity or production levels.

Fixed Costs

Expenses like rent, salaries, and insurance that stay the same no matter the production or sales volume.

Operating Cash Flow

Cash generated from a company's normal business operations, indicating whether a company can maintain and grow its operations.

Cash Break-even Point

The point at which a business generates enough revenue to cover its operating cash expenses, resulting in zero net cash flow.