Final answer:
Inferior goods are those for which demand decreases as income increases because consumers can afford better alternatives. As income rises, people often buy fewer inferior goods and switch to higher-quality products.
Step-by-step explanation:
When talking about demand in economics, 'inferior goods' refer to goods for which the quantity demanded falls as income rises, and conversely, the quantity demanded rises when income falls. This means that as people's incomes increase, they tend to purchase less of these inferior goods because they can now afford better, more expensive alternatives. An example of an inferior good could be a household opting for fewer hamburgers and instead eating more steak as their income increases, indicative of their ability to afford higher-quality food items.