In consumer theory, which term is used for a good whose quantity demanded decreases when consumer income rises (holding prices constant)?

Introduction / Context:
This question examines understanding of how demand changes with income in microeconomics. Goods are commonly classified as normal or inferior based on the relationship between income and quantity demanded. Recognising these categories is crucial for forecasting demand and understanding consumer behaviour when incomes change due to growth, recession, or policy measures.

Given Data / Assumptions:

• We are told that when consumer income rises, the quantity demanded of the good falls.
• Prices are assumed to be constant while income changes.
• We must select the correct term used in economics to describe such a good.

Concept / Approach:
A normal good is one for which demand increases when income rises, so income elasticity of demand is positive. An inferior good is one for which demand decreases when income rises, so income elasticity is negative. Veblen goods are luxury items where higher prices may increase demand due to status effects, but this is a price effect, not an income effect. The term "exclusive good" is not a standard classification in basic consumer theory. The key is to match the described behaviour with the correct income demand relationship.

Step-by-Step Solution:
Step 1: Note the direction of change: income increases and demand for the good decreases. Step 2: Recall that for a normal good, demand moves in the same direction as income, so this does not match. Step 3: Recall that for an inferior good, demand moves in the opposite direction to income, which exactly matches the description. Step 4: Recognise that Veblen goods are defined by how demand responds to price, not to income, and are not relevant here. Step 5: Understand that "exclusive good" is not an established technical term in this context. Step 6: Conclude that the good described in the question is an inferior good.

Verification / Alternative check:
A common everyday example of an inferior good is basic coarse grain or cheap instant noodles. When consumers have low incomes, they may buy large quantities of such low quality foods. As their incomes rise, they switch to higher quality foods and reduce consumption of the cheaper items. This real world pattern matches the definition of an inferior good and illustrates the direction of change described in the question. Therefore, the term inferior good is appropriate.

Why Other Options Are Wrong:
Option A, Veblen good, refers to goods for which demand may increase as price rises because they serve as status symbols, such as certain designer clothing or luxury cars. This is about price, not income. Option B, normal good, is the opposite of what is described because demand for a normal good increases with income. Option C, exclusive good, does not have a standard definition in consumer theory for this type of behaviour. Only option D, inferior good, refers to goods for which demand declines when income rises.

Common Pitfalls:
A typical mistake is to assume that inferior means low quality in all respects, which may not always be accurate. Inferior in economics is strictly about the direction of the income demand relationship. Another error is confusing the effect of price with the effect of income; Veblen goods deal with price and status, not income. Keeping track of whether a question is about income changes or price changes helps avoid this confusion.

Final Answer:
A good whose quantity demanded decreases when consumer income rises is called an inferior good.