The oil pump is like a mini impellor pump. it needs to be rotating to move the oil. That's why you need to check the water pump belt once in a while. If belt breaks, no rotate and no oil.
OK, back to consumption, the arm is a cam that when adjusted, allows more or less oil through the lines. As the throttle position changes, so does the pump arm. More throttle, means the cable pulls the cam open and lets more oil in.
When people say the pump fails, usually there's nothing wrong with the pump, but that it is not turning via the water pump belt. Or if the cable breaks.
You'll notice the arm is spring loaded, so if the cable did slip off, the arm would spin all the way round leaving the pump wide open....full flow.
With the machine off, move the throttle lever and see if the pump lever moves freely along with it. The cable could be frayed inside the cable housing. If ok, check the pump alignment marks. There are scribe marks on the arm and the pump body. They should line up.
You should be burning around 1 qt oil to 10 gal gas.........40/1.
Hopefully that all makes sense.