In consumer theory, goods for which the quantity demanded moves in the opposite direction to the income of the consumer are known as which type of goods?

Introduction / Context:
This question examines your understanding of how consumer income affects the demand for different types of goods. In microeconomics, goods are classified based on how demand responds to changes in income. Recognising the category for which demand decreases when income increases, and increases when income falls, is essential for correctly interpreting income demand relationships and drawing Engel curves.

Given Data / Assumptions:

• We focus on the relationship between consumer income and quantity demanded, holding other factors constant.
• The question specifies that demand moves in the opposite direction to income.
• The options list inferior goods, normal goods, complementary goods, and substitute goods.
• We assume standard textbook definitions of these terms.

Concept / Approach:
Normal goods are those for which demand rises when income rises and falls when income falls. Inferior goods see the reverse pattern: as income increases, consumers reduce their purchases of these goods because they can now afford better quality or more preferred alternatives. Complementary goods and substitute goods describe relationships between two different goods, based on how demand for one responds to changes in the price of another, and are not defined by income effects. Therefore, the type of goods where demand moves in the opposite direction to income is called inferior goods.

Step-by-Step Solution:
Step 1: Identify the relationship described: when income increases, demand decreases, and when income decreases, demand increases.Step 2: Recall that normal goods show a positive income effect: demand and income move in the same direction, so this does not match.Step 3: Inferior goods show a negative income effect: as income rises, people shift away to higher quality goods, so demand for inferior goods falls.Step 4: Complementary goods are defined by joint consumption, such as tea and sugar, where demand links to the price of the related good, not income.Step 5: Substitute goods are goods that can replace each other in consumption, and their definition again relates to the price of another good rather than to income.Step 6: Therefore, the correct label for goods whose demand moves opposite to income is inferior goods.

Verification / Alternative check:
You can think of common examples to verify this concept. Items like low quality grains, coarse cloth, or basic bus travel sometimes behave as inferior goods. When a consumer income rises, they may switch to fine rice, branded clothing, or private transport, reducing demand for the lower quality options. When income falls, they return to the cheaper alternatives. These examples match what economists call inferior goods and show that the income and demand movements are in opposite directions, which confirms the definition.

Why Other Options Are Wrong:
Normal goods: Demand and income move together, so they do not fit the description of opposite movement.

Complementary goods: These are defined by joint use with another good, for example toothbrush and toothpaste, and the relationship is based on price, not income.

Substitute goods: These are defined by the possibility of replacement between goods when relative prices change, again not by income changes.

Common Pitfalls:
Some learners assume that inferior goods must be low priced or poor quality in all cases, but the formal definition is about the income demand relationship, not the absolute price. Others confusingly mix income effects with cross price effects. Keeping a clear distinction between how demand responds to income and how it responds to the price of the same or different goods helps you avoid such mistakes on exam questions.

Final Answer:
Goods whose demand moves in the opposite direction to consumer income are called inferior goods.