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The Smith's household income is $112,000 per year. The family believes that they have $15,000 available to spend on nonessentials such as vacations and entertainment. The $15,000 represents the Smith's _____.

User Notpeter
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Answer:

Discretionary income.

Step-by-step explanation:

Discretionary income: It is defined as income that is left out of total household income after paying for all essential expenses like Rent, foods, cloths, tax, etc. An individual can use discretionary income in non-essential income like a vacation, entertainment, etc. People have more control over discretionary income as they can not control their essential expenses like rent, utilities, etc, however, they can reduce expenses on non-essential items. Discretionary income is important for the marketer as they need consumers with more discretionary income to buy their goods and services.

Therefore, in the given case $15000 represents Smith´s discretionary income.

User Mike Pollard
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