Consumption Process

Consumption Process

Consumption, the process of deriving utility from a commodity or service. More generally, it describes the business of acquiring commodities and services in order to obtain satisfaction directly from them; or indicates the amount of expenditure on them.

In economics, 'consumption' does not necessarily imply the physical destruction of the commodity 'consumed'. Food is consumed, but so are objects such as pictures, which are not destroyed in yielding utility or satisfaction. Consumption is therefore not necessarily a tangible process: an audience may be said to 'consume' the services of actors or musicians.

Economists have come to regard utility less in terms of the satisfaction derived from goods and services and more in terms of the degree to which goods and services are desired. They have correspondingly tended to shift their use of the word 'consumption' to mean the process of acquiring goods and services, and the amount of expenditure on them, where the purpose is to derive utility.

Following from this it has become customary, in considering total spending generating the community's flow of production of goods and services, to distinguish between consumption demand and investment demand, the latter representing demand for capital goods desired not for their utility but because they add to the future productive capacity of the community. If consumption is regarded as closely related to output and income, investment then becomes the decisive element determining the level of total demand and thus the level of total production in the economy.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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