What characterizes an inferior good in economics?

An inferior good is characterized by an inverse relationship between income and demand. Specifically, as people's incomes increase, the demand for inferior goods tends to decrease. This happens because consumers typically opt for higher-quality substitutes when they have more disposable income.

For example, consider a scenario where instant noodles are considered an inferior good. When individuals have lower income levels, they may rely heavily on affordable options like instant noodles. However, as their income rises, they are more likely to purchase higher-quality food alternatives, leading to a decline in the demand for instant noodles.

Recognizing this characteristic is crucial in understanding consumer behavior and how market dynamics shift in response to changes in income levels. This concept differs significantly from other goods, such as normal goods, where demand increases with rising income.