What is an inferior good?

An inferior good is defined as a type of good for which demand decreases when consumer income increases. This means that as people have more income, they tend to buy less of these goods. Instead, they often opt for higher-quality or more expensive alternatives. For instance, inexpensive foods like ramen noodles or generic brands can be considered inferior goods; when people's financial situation improves, they may choose to purchase more premium brands or healthier options instead.

Other choices outline different concepts. Some suggest that demand increases with income, which characterizes normal goods rather than inferior goods. Options that indicate constant demand or perpetual high demand do not accurately depict the relationship between income changes and demand for inferior goods. Thus, the definition of an inferior good is crucial to understanding consumer behavior in response to income fluctuations.