ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Some expenses, such as vacation costs and luxury items, are not necessary to maintain a household and, thus, are classified as discretionary expenses. In other words, the income-earner can pay for these goods or services at their own discretion.

Detailed explanation-2: -Training costs may be essential expenses for a company, but discretionary for another. If a recession occurs, discretionary expenses will be the first expenses to be cut by a business. Investments are also discretionary expenses for businesses.

Detailed explanation-3: -A discretionary fixed cost is a fixed cost that can be changed in the short run without having a significant impact on the organization. Examples of discretionary fixed costs include advertising, research and development, and training programs.

Detailed explanation-4: -What are Non-Discretionary examples? Examples of these expenses include: rent, food, or mortgage payments. In contrast, discretionary spending refers to non-essential expenses, such as hobbies and travel.

Detailed explanation-5: -A discretionary expense is voluntary spending. You want to buy something, but it isn’t mandatory. Entertainment and recreational purchases fall into this category. On the other hand, bills such as rent, home loan payments and utilities are nondiscretionary expenses.