Which term describes goods that become less demanded when income increases?

• A. Complementary goods
• B. Inferior goods
• C. Normal goods
• D. Substitute goods

Answer: (B)

Demand falls when income rises for inferior goods because people use more of their increased purchasing power to buy higher-quality or more desirable substitutes. These are typically cheaper options that satisfy basic needs, so as people become wealthier they switch away from them. For example, someone might buy less cheap branded staples or switch from cheaper used items to newer, more expensive ones as their income grows. This contrasts with normal goods, whose demand increases with income; complementary goods, which are consumed together with another good; and substitutes, which are related to changes in price of one good relative to another rather than directly to income.