This document defines income elasticity of demand and provides examples of different types. Income elasticity of demand measures the responsiveness of quantity demanded to a change in income. It is calculated as the percentage change in quantity divided by the percentage change in income. Types of income elasticity include negative (demand decreases as income rises), zero (demand is unchanged by income changes), relatively inelastic (demand changes less than income), unitary (demand and income change proportionally), and relatively elastic (demand changes more than income).

1. Subject : Presentation on Income
Elasticity of Demand

2.  Definition :
“Other things remaining the same, it is
degree of responsiveness of quantity demanded of
commodity due to change in consumers income.”
“When change in the income of the
consumer similarly change in quantity demanded of
of x commodity is called income elasticity of
demand. “
Income elasticity of demand is measures by
how much the quantity demanded changes with
respect to the change in income.

3. Mathematically, it is expressed as:
Symbolically, it is expressed as:
Where,
= Income elasticity
= Change in quantity demanded
= change in consumer’s income
= original consumer’s income
= original quantity demanded

4.  Negative Income Elasticity of Demand
 Zero Income Elasticity of Demand
 Relatively Income Inelasticity of Demand
 Unitary Income Elasticity of Demand
 Relatively Income Elasticity of Demand

5. Quantity demanded for a commodity decreases with the
rise in income of the consumer and vice versa. Here
consumer decreases the demand of inferior goods and
increases the superior goods, also he increase his standard of
living. <0

6. Income of the consumer increased/changed but
quantity demanded of commodity remain constant
is called zero income elasticity of demand. E.g. salt
=0

7. In this type income of the consumer is
larger changed than the quantity demanded
of commodity, this is positive income
elasticity of demand. < 1

8. change in the income of the consumer and
quantity demanded with same proportion is
unitary income elasticity of demand.
= 1

9. In this type quantity demanded is larger changed
than the income of the consumer.
>1