DECA Sports and Entertainment Marketing Practice Exam

What does discretionary income refer to?

1. The total income earned by individuals

2. The money available after necessities are paid

3. Income that is saved for emergencies

4. Funds reserved for investments

The correct answer is: The money available after necessities are paid

Discretionary income refers to the amount of money that individuals have available to spend or save after they have met their essential needs, such as housing, food, taxes, and other necessary expenses. This concept is crucial in understanding consumer behavior, particularly in the context of sports and entertainment marketing, as it represents the funds that can be allocated towards non-essential purchases, such as entertainment, luxury items, and recreational activities. When individuals have a higher level of discretionary income, they are more likely to spend on services and products that enhance their lifestyle, including tickets to events, subscription services, and other leisure pursuits. This is why businesses in the entertainment and sports industries closely monitor trends in discretionary income; shifts in this area can indicate potential sales opportunities or downturns. The other options, while they illustrate different financial concepts, do not capture the essence of discretionary income. Total income earned encapsulates all earnings without deducting necessary living expenses, while income saved for emergencies and funds reserved for investments indicate specific budgeting choices rather than the leftover income available for discretionary spending.