General Definition
Consumption is the act of using up resources which can apply to the food and drinks stomached and the services enjoyed. Groceries, fruits, vegetables, ready-made food, fast food and drinks are subject to direct consumption.
Definition in Economics:
Consumption can be defined as the spending by consumers on nondurable goods and services (including services related to the ownership of homes and consumer durables). According to mainstream economists, only the final purchase of any produced good can fall in the category of consumption.
The determinate factors of consumption include - income, consumer expectations, consumer assets and wealth, consumer credits, interest rate, household size, social groups, consumer taste and area.
There are two major types of consumption depending on the directness and immediacy of the consumption; they are - direct or final consumption and indirect or productive consumption.
Direct consumption happens when the goods can be consumed directly and the indirect one happens when the purchased goods are used in the production of directly consumable goods.
Those involved in the act of consumption are called consumers and the goods consumed are consumer products.
Use the Term in Sentences:
- Consumption is the end goal of all economic endeavors.
- The total sum of consumption, government spending, investments and net exports is the GDP of a country.