International Baccalaureate (IB) Practice Exam

Groceries are classified as which type of expense?

1. Fixed expense

2. Variable expense

3. Discretionary expense

4. Intermittent expense

The correct answer is: Variable expense

Groceries are classified as a variable expense because their cost can fluctuate based on usage and consumption patterns. Unlike fixed expenses, such as rent or mortgage payments, which remain constant each month, variable expenses can change from one period to another depending on factors like dietary choices, family size, and shopping habits. For example, one month you might spend more on groceries if you are hosting a gathering, while another month you could spend less if you are consuming items you already have at home. Discretionary expenses refer to non-essential spending, such as entertainment or luxury items, which are not necessary for daily living. Intermittent expenses occur irregularly and can be predicted, such as car maintenance, which does not apply to groceries. Therefore, the classification of groceries as a variable expense is accurate due to their inherent nature of variability in cost based on consumption.