Income Elasticity of Demand - A Geometric Interpretation

This article explains the concepts of marginal propensity to consume as well as of Income elasticity of demand for a commodity. They are illustrated geometrically and their interrelationships are explored. An alternative definition of income elasticity of demand emerges as a proportion of hypothetical and actual demand of the commodity where hypothetical demand has been calculated on the basis of marginal propensity to consume - for all the lower incomes - remaining the same as found for the given income.