Chapter 4: Economic and socioeconomic forces

One area of interest to marketers is the manner in which consumers allocate____ ( after- tax personal income ) between purchases of essential and nonessential goods. 

• 1. discretionary income

• disposable income

• the total income

• the total per capita consumption expenditure

_______ is the amount of income left after paying taxes and making essential purchases.

• discretionary income

• disposable income

• the total income

• the total per capita consumption expenditure

(a)   consumer expenditures eliminate differences in relative prices, marketers use these data to analyse how the composition of consumption changes with the level of development. 

Answer explanation

PPP= Purchasing Power Parity

a measure of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currencies

The percentage differences within a consumption category________ with the consumption expenditures per capita.

• 1. increase

• decrease

• vary

• 2. do not vary

If income is 5000 USD, tax is 10%, so disposable income is 4500  USD, and if essential goods cost 200 USD, then discretionary income is ______

• 4000 USD

• 4300 USD

• 4400 USD

• 3900 USD

Answer explanation

discretionary income = disposable income - the cost of essential goods 

= 4500 - 200 = 4300 USD

According to The World Bank, the populations living in high-income econiomies use nearly seven times as much  commercial energy per capita as do people in _______

• developing economies

• industrialized nations

• developed nations

• 1. urban areas.

If income is 2000 USD, tax is 7%. So, the disposable income is_______

• 140 USD

• 1500 USD

•  1760 USD

• 1860 USD

Answer explanation

 disposable income = 2000 - 2000x 7% = 1860 USD

The percentages spent on transport and communication, consumer durables, health care, and other consumption  by households of developed nations are_____ the percentage of those in developing nation.

• twice

• three

• four

• the same as

A member of the family has income worth 15,000 VND /a month, and income tax is 15 %. The amount of income spent on essential purchases are 8,000 VND. Calculating the discretionary income. 

•  12, 750 VND

• 2,250 VND

• 11,000 VND

•  4,750 VND

A member of the family has income worth 15,000 VND /a month, and income tax is 15 %. The amount of income spent on essential purchases are 8,000 VND. Calculating the disposable income. 

• 12, 750 VND

•  2,250 VND

•  11,000 VND

• 4,750 VND

Answer explanation

 the disposable income = 15,000 - 15,000x15% = 12,750 VND

        the discretionary income = 12,750 - 8,000 = 4,750 VND