Consumption In Managerial Economics

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3.1.1. Consumption – An Introduction

Consumption is the process of utilisation of economic goods to satisfy the consumer needs. It is the amount of a thing used up, incorporated, or transformed into something else in a particular duration of time period. Only the final purchase of goods and services by individuals constitutes to consumption.

Consumption

Consumers can be individuals, groups, or even organisations. They may be able to satisfy their needs in a number of ways; through the acquisition of goods or services, by discovering ideas or experiences, or something else entirely. The process goes beyond just buying something. It involves the search for, acquisition of, use of and disposal of whatever was found to fulfil the need.

Consumption
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Features of Consumption

Consumption is an essential aspect; it is the beginning as well as the end of all economic activities. The production, as an economic activity depends upon consumption. Therefore, consumption determines the production.

Every time we purchase food at the drive-thru or use the debit or credit card to buy something, we are adding to consumption. Consumption is one of the biggest concepts in economics and is extremely important because it helps in determining the growth and success of the
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This would lead to unemployment. Therefore, it becomes very important to understand the needs and psychology of consumers.

Consumption is defined in many ways; it can be described as the final purchase of goods and services by individuals. For e.g.: The purchase of a new pair of shoes, a hamburger at the fast food restaurant, or the service of getting your house cleaned. Many aspects in economics explore how the income of families and individuals affects consumption and spending habits.

3.1.2. Role of Consumer Under Open and Closed Economy

Consumer plays a very important role in any economy, be it open or closed. In fact, we can say that it is because of the consumers that economy has a growth and impact.

We shall define each type of economy and study in detail of the role played by consumers. Role of consumer under economy
Open Economy

An open economy is an economy in which there are economic activities between the domestic and foreign countries. It is free from trade barriers and interacts freely with other economies all over the world. An open economy interacts with other countries in two ways, i.e., both import and export happens in an open

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