Goods are described as inferior if their demand

Step 1: Analyze the question The question asks for the definition of an inferior good. The key is knowing which variable the definition depends on: price or income.

Step 2: Explain the concept Goods are classified by how demand responds to a change in the consumer's income (income elasticity of demand):

• Normal goods: demand rises as income rises (positive income elasticity).
• Inferior goods: demand falls as income rises (negative income elasticity). Examples in Nigeria include garri, second-hand clothing ("okrika"), and low-quality local rice. When people earn more, they switch to better alternatives such as foreign rice, new clothes, or bread.
• Giffen goods: a special case of inferior goods where demand rises as price rises. This is a price relationship, not the general definition.

Step 3: Check each option

• A. Decreases as price falls: This is an unusual price-demand relationship, not tied to income. It does not define an inferior good.
• B. Increases as income rises: This describes a normal good, so it is wrong.
• C. Decreases as income increases: This matches the definition of an inferior good, so it is correct.
• D. Increases as price increases: This describes a Giffen good (or a good with a perverse demand curve), not inferior goods in general.

Step 4: Answer

Tip: Look at the keyword in the question. If it says "inferior" or "normal," think income. If it says "Giffen" or "law of demand," think price. Memory trick: Inferior = Income goes up, demand goes down.