Multiple Choice
Money functions as a store of value if it allows you to:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Which of the following is an example of discretionary spending?
A
Paying for health insurance premiums
B
Purchasing a concert ticket
C
Buying groceries for basic meals
D
Paying monthly rent
Verified step by step guidance1
Understand the concept of discretionary spending: it refers to non-essential expenses that consumers can choose to spend on or not, such as entertainment or luxury items.
Identify the nature of each option: paying for health insurance premiums, buying groceries for basic meals, and paying monthly rent are generally considered essential or mandatory expenses.
Recognize that purchasing a concert ticket is a non-essential, optional expense, which fits the definition of discretionary spending.
Compare all options and confirm that the only discretionary spending example is the purchase of a concert ticket.
Conclude that discretionary spending involves choices about wants rather than needs, and thus purchasing a concert ticket is the correct example.
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