Answer:
Inferior goods refer to those goods that share an inverse relationship with the income of a consumer. As income increases the demand for inferior goods fall and vice-versa. This is because with an increase in the income, the consumer tends to shift demand to superior quality goods, thereby, reducing the demand for inferior goods.
For example, coarse cereals can be considered as inferior goods. A good can be normal or inferior depending on the level of consumer s income. For instance, at a very low level of income, coarse cereals may be a normal good. However, for higher income level, ceteris paribus, coarse cereals will be an inferior good because with an increase in income, a consumer will reduce his/her consumption of inferior cereals and it will be substituted by superior cereals.
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