What defines an "inferior good" in economics?

An inferior good is characterized by a unique relationship between its demand and consumer income. Specifically, when consumer income increases, the demand for an inferior good decreases. This occurs because consumers tend to replace inferior goods with higher-quality alternatives as their purchasing power improves. For instance, if a person typically buys generic brand products due to budget constraints, an increase in income may lead them to purchase brand-name products instead. Therefore, when income rises, the demand for the inferior good diminishes, confirming its classification.

Understanding this relationship is crucial in economic analysis, especially when evaluating consumer behavior and market dynamics. It helps distinguish inferior goods from normal goods, where demand increases with rising income.