If the demand for a product decreases when consumer income increases, what is this product considered?

When the demand for a product decreases as consumer income increases, the product is classified as an inferior good. This classification arises from the relationship between income and demand for certain goods.

Inferior goods are those for which demand falls when consumer incomes rise. This typically occurs because consumers will substitute inferior goods with more desirable alternatives, such as higher quality or more expensive goods, as their financial situation improves.

For instance, if a consumer relies on budget brands for groceries and their income increases, they may start purchasing name-brand products instead, leading to a decrease in the demand for the budget options. This is a clear indicator that the product in question is inferior in nature, as it experiences an inverse relationship with increased consumer income.

Normal goods, on the other hand, would see an increase in demand with rising incomes, and luxury goods are typically associated with higher demand at higher income levels. Giffen goods present a more complex scenario where demand may increase even as prices rise, but that concept is not directly related to changes in income.