DECA Sports and Entertainment Marketing Practice Exam

Which factor does discretionary income primarily consider?

1. Total income before expenses

2. Income remaining after basic expenses

3. Wealth accumulated over time

4. Government benefits received

The correct answer is: Income remaining after basic expenses

Discretionary income primarily refers to the amount of money that individuals have available to spend or save after they have covered their essential expenses such as housing, food, utilities, and transportation. This is why the option that refers to income remaining after basic expenses is the correct choice. Understanding discretionary income is important for marketers, especially in the sports and entertainment sectors, because it indicates the funds that consumers can allocate to non-essential items, like entertainment, travel, and luxury goods. With this understanding, businesses can target their marketing strategies towards consumers who have a greater amount of discretionary income, thereby increasing the potential for sales and engagement in these areas. The other factors listed do not directly relate to the concept of discretionary income, as they represent different aspects of personal finance and do not specifically reflect the leftover funds available after necessary expenditures.