Final answer:
An inferior good is one whose demand increases when consumer income decreases. The demand curve for an inferior good typically shifts to the right with a decrease in income and to the left with an increase in income, indicative of a negative income elasticity of demand.
Step-by-step explanation:
If a decrease in income increases the demand for a good, then the good is an inferior good. This concept is key in understanding how the demand curve for different types of goods shifts when there is a change in consumer income. When it comes to an inferior good, a decrease in income leads to an increase in its demand, and the demand curve for that good will shift to the right. Conversely, an increase in income will cause the demand for inferior goods to fall, resulting in the demand curve shifting to the left. The degree to which the demand curve shifts is dependent on the income elasticity of demand, which is negative for inferior goods.
In summary, normal goods have a positive income elasticity of demand, meaning their demand increases as income rises. For inferior goods, the income elasticity of demand is negative, indicating that their demand increases when income decreases. These concepts help predict and understand consumer behavior in relation to changes in income levels.