Consumption is the purchase of goods and services by:

• A. households
• B. firms
• C. foreign countries
• D. the government

Answer: (A)

Verified step by step guidance

1. Understand the concept of consumption in microeconomics: Consumption refers to the use or purchase of goods and services by economic agents.
2. Identify the main economic agents: households, firms, foreign countries, and the government.
3. Recall that households are the primary consumers in an economy because they buy goods and services for personal use.
4. Recognize that firms typically produce goods and services rather than consume them, foreign countries engage in trade, and the government purchases goods and services as part of public spending.
5. Conclude that consumption is specifically the purchase of goods and services by households.