In the case of normal, demand and income are possitivelly related, or demand for normal goods and services increase with an increase in income and visa virsa.

For an inferior good or service ,demand and income of consumer are inversely related, it means an increase in income results with a decrease in demand for the inferior good. The reason is simple, the consumer is now well off he or she can afford a more standard good instead of the previous one,i.e, he or she used to eat potatoes when his or her salary has doubled so he or she can buy meat by switching the potatoes.

**The Relationship Between Income and Demand**

The theory of demand explains the relationship between income and demand for goods and services. It is an essential concept in economics that helps us understand how changes in income can affect the quantity of goods and services that individuals are willing and able to purchase.

**Income Effect**

The income effect is a fundamental concept in the theory of demand. It suggests that as individuals' income increases, their purchasing power also increases. This, in turn, leads to a change in the quantity demanded of goods and services.

**Normal Goods**

Normal goods are those for which the demand increases as income rises. This is because individuals have more disposable income to spend on goods and services. As a result, they tend to purchase more of these goods.

For example, if an individual's income increases, they may choose to buy a higher-quality smartphone, go on more vacations, or dine at more expensive restaurants. In these cases, the demand for smartphones, vacations, and fine dining experiences would increase as income rises.

**Inferior Goods**

In contrast to normal goods, inferior goods are those for which the demand decreases as income rises. This happens when individuals consider these goods to be of lower quality or less desirable compared to other alternatives that become affordable with higher income.

For example, if an individual's income increases, they may choose to stop buying generic products and switch to branded products instead. In this case, the demand for generic products would decrease as income rises.

**Veblen Goods**

Veblen goods are a unique category of goods that defy the typical relationship between income and demand. These goods are considered to be status symbols and their demand actually increases as income rises. The reason behind this is that individuals view these goods as luxury or prestigious items.

For example, luxury cars, high-end fashion items, and expensive jewelry are often considered Veblen goods. As income increases, the demand for these goods also increases due to their exclusive nature and the desire to display wealth or social status.

**Conclusion**

The theory of demand explains the relationship between income and demand for goods and services. As income increases, the demand for normal goods generally increases as individuals have more purchasing power. However, the demand for inferior goods may decrease as individuals opt for higher-quality alternatives. Additionally, Veblen goods defy the typical relationship, with demand increasing as income rises due to their status symbol nature. Understanding the impact of income on demand is crucial for businesses and policymakers to make informed decisions about pricing, production, and economic policies.