What is the relationship between consumption and production?

Answer 1

Production and consumption is another way of saying supply and demand. If production far exceeds consumption for a particular product, the market becomes flooded or saturated and the price of the product goes way down. If consumption far exceeds production, there is a major shortage of the product, so its price goes way up. It is usually best to produce just enough to keep your prices competitive. However, it is certainly not a bad thing to put so much quality into certain products that it causes production to be far below market demands, as long as your customers recognize the difference in quality and are willing to pay extra for it. I think that is the sort of corporate behavior that builds brand loyalty.

Answer 2

Production is the firms production/creation of goods *supply*

Consumption is the purchase and use of the goods by the public *demand*

In a market equilibrium, production equals consumption.

Supply=Demand

Answer 3

When you grow a potato you are producing it.---------- Production

when you eat that potato you are consuming it.-------- Consumption

Answer 4

The relationship between consumption and production is that production is dependent on consumption. The higher the consumption, the higher the production.