A decline in the availability of bicycle handle bars will decrease Huffy Bicycle Company's production of bicycles.Why does decreased production in turn reduce Huffy's demand for bicycle seats?

Question

Quizplus · Accepted Answer

Bicycle handle bars and seats have joint demand, meaning that they are often used together in the production of bicycles. When the availability of handle bars declines, the production of bicycles decreases, which in turn decreases the demand for bicycle seats. This is because the demand for bicycle seats is dependent on the demand for bicycles, which decreases when production decreases. Joint demand is different from derived demand (A), which occurs when the demand for one product is derived from the demand for another product that it helps to produce or distribute. Inelastic (C) and elastic (D) demand refer to the responsiveness of demand to changes in price or other variables, and are not relevant to this situation.

A Decline in the Availability of Bicycle Handle Bars Will