According to the idea of consumer sovereignty, what will happen ...

[hbsimmons88]

According to the idea of consumer sovereignty, what will happen in the market for widgets if consumers decide they no longer desire widgets?
 
  What will be an ideal response?

Question 2

The iconic American drink-maker, Coca-Cola, announced plans in 2008 to buy the dominant Chinese fruit juice company for 2.5 billion. But China just rolled out a new law to guard against business monopolies.
 
  How would this rent-seeking behavior by Coca-Cola most likely affect efficiency in the drink market? A) Profit would increase.
  B) Producer surplus would increase.
  C) Consumer surplus would decrease.
  D) Deadweight loss would increase.

[KKcool]

Answer to Question 1

If consumers no longer desire widgets, they will send a message to producers by not purchasing widgets. Since firms will be unable to make a profit selling widgets, widget-producing firms will go out of business (or switch to producing something else) and widgets will no longer be produced. Thus, the consumers' preferences dictate what is produced.

Answer to Question 2

D

[hbsimmons88]

Thanks for the timely response, appreciate it

[ricroger]

Wow, this really help