explain consumption as the mother of production
Answers
Consumption, defined as spending for acquisition of utility, is a major concept in economics and is also studied in many other social sciences. It is seen in contrast to investing, which is spending for acquisition of future income.[1]
Different schools of economists define consumption differently. According to mainstream economists, only the final purchase of newly produced goods and services by individuals for immediate use constitutes consumption, while other types of expenditure — in particular, fixed investment, intermediate consumption, and government spending — are placed in separate categories (see Consumer choice). Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g. the selection, adoption, use, disposal and recycling of goods and services).[citation needed]
Economists are particularly interested in the relationship between consumption and income, as modeled with the consumption function.
Consumption is the mother of production because based on consumption forecasting production function will be performed.
Explanation:
Consumption is the utilization of goods and services by households. Consumption is the purpose of any economic activity to be performed or already performed. Macro economics considers aggregate production while micro economics considers consumption by the household.
Consumption of products and services highly affects the whole chain of trade and commerce. Consumption may be affected by climate change, readiness to purchase, purchasing power, change of taste and preferences. Whole product life cycle is affected hence it is the mother of production.