Discretionary expenditure refers to spending on non-essential items. These are goods that should only be bought after all essential necessities, like food and electricity, are paid for.
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Current expenditure is spending money on day-to-day items that get used up quickly and only provide a benefit for a short period of time. q q q
Capital expenditure is spending money on items that will provide a benefit for a long time before they wear out.
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Consumer durables are goods that will give benefit for a long period of time such as televisions, fridges, cookers and washing machines. q q q
Opportunity cost refers to the item you must do without in order to buy another item.
Key Concepts
1. What is income? 2. What is the difference between regular and irregular income? 3. What is Child Benefit? Who pays Child Benefit to parents? 4. What are unemployment benefits?
5. What are benefits-in-kind? List three examples of benefits-in-kind that a company could offer an employee.
8. List three examples of fixed expenditure. 9. List three examples of irregular expenditure. 10. List three examples of discretionary expenditure. 11. What is meant by the term ‘opportunity cost’?
Critical Thinking Skills
1. Identify one regular and one irregular form of income for: (a) a secondary school student (b) a bus driver (c) a retired teacher
