y in which consumers spend their money.In competing for consumer's money, producers will produce more of those products, which are in demand, for the prices will be higher, and less of those products that are not in demand, for prices will be lower. Production is the means; consumption is the end.Those producers, who satisfy the wants of the consumers will be rewarded with large monetary return, those who don't will not remain in business for long.Consumer's Sovereignty only exists through freedom of choice. Consumers are free to accept or reject whatever is produced in the market place and therefore consumer is king because production ultimately is oriented toward meeting the wants of the consumerGovernment interventionAn increase in the power of the state has become a central fact of modern Western society. Crucial decisions about production and distribution have come to be made through the political process rather than through the market place.Government intervention can take a number of forms. Fixing prices above or below the free market equilibrium Taxing the production or sale of carious goods Subsidising the production or sale of various goods Taking over production. The government could nationalise various industries or run them directly from government department ( e.g. defence and health)Regulation various laws have also been passed to regulate the behaviour of firms. For example, various activities, such as the dumping of toxic waste, have been made illegal. Licences or official permission have to be obtained to produce certain goods, a regulatory body supervises the activities of various firms and prevent any that it feels to be against the public interest (e.g. the production of unsafe children's toys). We have seen more and more government intervention in the market place from the E.U. as they strive for conformity amongst member nations.Price ControlPrice control is a clear example where government intervention disrupts t...
