In a ______ economy, consumers decode what is to be produced and by whom through their dollar “votes.”

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BlackTom AI · Accepted Answer

Consider the idea being tested: how a economy coordinates production and consumer preferences through consumer choices.
Option 1: Command. In a command economy, the central authority makes production and distribution decisions, rather than consumers voting with their dollars. This interpretation does not align with the phrase about decoding by dollar votes.
Option 2: Planned. A planned economy is another term for a centrally planned system where planners decide what to produce, whom to employ, and how to allocate resources, not driven by consumer dollar votes.
Option 3: Market-Directed. This option describes an economy where consumers express their preferences and influence production through their purchases, effectively voting with their dollars for what should be produced and by whom. It captures the decentralized signaling mechanism of markets.
Option 4: Marketing. Marketing refers to activities around promoting and selling products, not the overarching economic mechanism by which production is allocated through consumer choices.
Option 5: Production-Oriented. A production-oriented approach focuses on what can be produced efficiently, sometimes prioritizing supply capabilities over consumer demand signals, which contrasts with the idea of consumer dollar votes guiding what is produced.
In summary, the statement highlights the market mechanism where consumer spending acts as a voting process that signals demand and guides producers, which is characteristic of a market-directed economy.

BUSI406 [Kubowicz Malhotra]: Principles of Marketing Midterm

In a ______ economy, consumers decode what is to be produced and by whom through their dollar “votes.”

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