What is consumption? Definition and examples

Consumption means the amount of something that people and other entities use. It is also the process of using something, often so that there is less of it available afterward. The term may refer to the using of products and services in an economy, or how much of those goods and services people use.

When we say that something is fit for human consumption, it means that people can eat or drink it.

We sometimes use the term when referring to information or entertainment that only certain people should see. For example, if I say “That film is not for public consumption,” it means that the general public should not watch it.

In the past, the term, along with King’s evil or scrofula, used to mean ‘tuberculosis.’



Consumption - definition and examples
Adam Smith, the ‘father of modern economics,’ once said: “Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”

Consumption – foundation of economics

Consumption is the process of buying or using goods and services. In other words, doing what consumers in an economy do – consume.

It is the basic foundation for economics, as well as a country’s broader economy. We base our whole economic system of reward and progress on purchasing (consuming) and producing more and more goods and services.

In an economy, consumers decide what to consume based on the availability and price of things. We also base what we consume on our own needs and wants.

According to MyAccountingCourse:



There are many industries, such as advertising and marketing that are solely devoted to figuring out how to get more consumers to consume their product.”

“Economics sees consumption as the bedrock of our economic activity, and is necessary for our lives.”

A government spending multiplier

The consumption function, in economics, is the relationship between consumption and disposable income. British economist John Maynard Keynes introduced the concept into macroeconomics in 1936. He used it to develop the notion of a government spending multiplier.



Macroeconomics is a branch of economics that focuses on large-scale economic factors. In other words, factors that exist throughout the whole economy.

Interest rates and unemployment, for example, are large-scale economic factors. Inflation and national output are also macroeconomic factors.

Microeconomics, the opposite of macroeconomics, is the study of the economic behavior of the economy’s individual units.