What is the impact of an increase in income on the demand for an inferior good?

An increase in income typically leads to a decrease in the demand for an inferior good. Inferior goods are defined as those goods for which demand decreases when consumer income rises. This occurs because when people have more income, they tend to prefer higher-quality substitutes or superior alternatives, moving away from inferior goods.

For example, consider a scenario where instant noodles are considered an inferior good. As individuals' incomes increase, they may choose to buy more expensive and higher-quality food options, thereby reducing their consumption of instant noodles. Thus, the overall demand for the inferior good declines as consumer priorities shift due to higher income levels. This illustrates the fundamental relationship between income and the demand for inferior goods, confirming that demand indeed decreases when income rises.