By consumption we
mean the satisfaction of our want by the use of commodities and services. When
we use a commodity, we really use its want satisfying quality of utility. For
example when we take a glass of water to quench our thirst we are said to consume
water. When we are sitting on chair in the office, we are consuming the chairs.
A person is sick, he calls in a Doctor, and he has consumed the Doctor’s
services. Thus, taking a glass of water means it is actual consumption of water
but in case of chair and Doctor’s Services, consumption refer to utilization of
chair of Doctor’s services, consumption refer to utilization of chair of
Doctor’s services.
Therefore
consumption can be defined as.
To make use of any
commodity of service for the satisfaction of our wants is called consumption.
Consumption means
destruction of utility.
Types of
consumption:
Consumption is
known as Direct of Final consumption when the goods satisfy human wants
directly and immediately. E.g. taking of meals, use of furniture. On the other
hand, consumption is called indirect or productive consumption when the goods
are not meant for final consumption but for producing other goods which will
satisfy human wants, e.g. use of fertilizer in agriculture.
Importance of
Consumption:
The consumption is
very importance as it is the beginning as well as the end of all economic
activities. A man feels desire and then the makes an effort to satisfy it when
the effort has been made the result is the satisfaction of the want. Thus want
is the beginning and satisfaction the end of our economic activity.
The production, as
an economic activity depends upon consumption. Producer is taking production of
a certain good because it is going to be consumed by the consumer. Therefore
consumption determines the production.
The intensity of
consumption of particular goods determines the price in a market. Thus
consumption also influences the exchange activity. The existence of exchange in
an economy is due to consumption only.
Distribution, i.e.
sharing of incomes to landlords, capitalist labour and organizer is also
influenced by consumption. Consumption indicates standard of living and
standard of living determines the efficiency. Efficiency determines the share
in the national income.
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