Consumption in economics and consumer goods : things you need to know now

What is consumption?

The term consumption comes from the Latin language “ cosumere ” which means to spend . Consumption is the action by which certain products, goods and services are used. You can also consume abstract issues , such as energy.

We understand by “consuming” the fact of using these products or services to satisfy some human need.

We can say that mass consumption later produced some social pathologies such as the compulsive tendency to consume goods of various types in society .

Consumption in Economics

In economics, consumption is the final phase of the economic process, mainly the production process, which is the moment when a good causes some utility to the consumer.

There are goods and services that are directly destroyed through the action of consumption, while in other cases what happens with these is that their consumption only consists of a partial transformation.

Ultimately what is understood as consumption in economics is the acquisition of goods and services by an economic subject, this can be a particular person, organization , company, any agent that has the ability to interrelate in the market.

The satisfaction of needs can refer to present or future needs, this is the ultimate goal of the consumption of a good or service. Consumers generate demand with respect to the production or merchandise that is desired.

On the other hand, the role of the consumer in the market, in mercantile and capitalist interactions, is to adjust their benefits according to the availability of goods and satisfactions that can be saved, which are the pains and fatigue that work implies to carry out a business. well determined.

When consuming, the person who acquires this good saves the work of doing it by their own means, avoiding all the efforts that were necessary for its manufacture.

According to macroeconomics , consumption in economics can be divided into two large groups:

• Private consumption. It is the value of the set of all purchases of goods and services that were made by different families , private institutions or private companies.

It is a calculation that counts the remuneration received by employees and the production of goods for self-consumption.

• Public consumption. Unlike the previous one, this includes the value of all expenses made by the national government through its different ministries and public governments in the performance of its functions and objectives.

Infrastructure planning projects represent a large part of public spending, and this includes spending invested in hospitals, schools, and other public institutions.

What are consumer goods

Consumer goods are all those goods, material or not, that can be purchased in the market by paying a price for them and that when using them provide immediate satisfaction to a need . They are opposed to intermediate goods and capital goods.

Consumer goods are everything that we buy or that we acquire upon payment in the market , so that they constitute the last link in the production chain.

Despite this, it is possible that these goods are also part of the first link if we take into account that many of them come from nature, and that in themselves they already have a utility that is clear for human beings.

In any case, practically all the consumer goods that we acquire and consume end up being transformed into other derivative products, so that we can say that they have a double character.

Once manufactured, produced or prepared by light industry, consumer goods are put on the market in order to meet the needs of those who buy them.

Although its definition and understanding is simple, the truth is that consumer goods constitute one of the most important products in consumer society, marking the GDP (Gross Domestic Product) index, although these and their consumption is not the only thing that it defines the economy and operation of the country, since investment will be important , which is the engine of growth of any economy and of course, the demand that conditions the supply of consumer goods quite a bit.

Types of consumer goods

After what has been explained we can say that there are different types of consumer goods, which can be classified according to the time of their use, as well as the degree of completion that the goods have.

Consumer goods according to the time of their use

–Durable goods , which can be used in a longer way in time, and their use is exhausted in a longer period of time.

Among the examples for them we would have, household appliances, machinery, or also houses, but not those that are newly acquired since they are not considered a consumer good but an investment good (capital goods).

–Non-durable goods , which are those that run out as they are used for a short period of time or immediately. For example, soap, makeup.

–Perishable goods, these could be classified within the non-durable since they can stop being useful in a short period of time due to their nature, such as food and drinks.

Consumer goods according to the degree of completion of the goods

–Final goods , are those goods to which we are going to give a final use, that is, they are the goods that are produced directly so that they can be used by the consumer and thus satisfy a specific need. These goods would be, for example, a table, a sweater or a pencil.

Within these final goods, we can differentiate between:

• Substitute goods , which are replaced by other goods that satisfy the same need. These goods are characterized because their consumption rises when their price falls, and vice versa and as an example we can mention foods such as milk, or coffee.

• Complementary goods , which are used in conjunction with others, and also if their price rises, their demand decreases, and vice versa, so we can mention a car and gasoline .

–Intermediate goods , which are the goods that are produced to be used in another production process and that are used to manufacture a final good. Examples for these we can mention wool for fabrics or wood for furniture.

Consumption Examples – common consumer goods

For example, housing is a consumer good. In this case, we are talking about a durable consumer good, because its use does not destroy the good itself.

You can live for hundreds of years in a home that, as long as you keep it standing and refurbish it, will not disappear due to excessive use.

Another example of a consumer good, in this case, non-durable, would be food or clothing . These consumer goods do wear out with their use. In the case of food, it is instantaneous (when you eat an apple – that is, when you use it – it disappears), and in the case of clothing, it is not instantaneous, but it is not durable in the long term either.

Household appliances would be another type of consumer good and as we have already pointed out, they are from the group of durable goods so that their use can be prolonged over time.

In the same way, cars would also be an enduring consumer good, while the gasoline that we use to make them work would be a final consumer good and within these, it would be a complementary good.

Regarding beauty products, medicines or pharmaceutical products, we have to say that they are non-durable consumer goods although they end up or perish after being consumed for a time.

On the other hand, if we buy tickets for the cinema or a show, it is also a consumer good, as well as public transport passes or tickets that are bought for trips.

Just point out an additional fact: Consumer goods are opposed to capital goods , which are those goods that are used to generate other goods and services .

They are also opposed to intermediate goods, which are those goods that are necessary and are used to generate other capital goods or consumer goods.

I hope that with these examples of consumer goods it has become perfectly clear to you what we are talking about when we talk about them, and why they are so important for society to function properly.

Without consumer goods we could not meet our basic and necessary needs as human beings!