If an increase in income causes the demand for good X to shift from D1 to D3, then good X is an INFERIOR GOOD.
Exhibit 3 - 6 show a decrease in the demand for good X as the income increases.
An inferior good is a type of good for which demand reduces as the income of the consumers increases. Inferior goods always have more expensive substitutes and customers prefer to buy these substitutes as their income increases and their economic condition improves. Thus, the higher the income, the lower the quantity of inferior goods demanded.