Scenario 7.2
Use the following scenario to answer the questions.
Accura Brake Company is a supplier of brake components to the manufacturers of lawn tractors and 4-wheel ATVs. It also sells its products to independent repair centers, dealers, and other wholesalers in the northeast and southern states of the USA. Accura Brake has done research on the demand for lawn tractors and found that most manufacturers are in the states of Kentucky, Tennessee, and Alabama. Research also shows that most of the dealers who sell directly to individual consumers are in the Midwestern states, while dealers who sell to small business landscaping companies tend to be located in the northeastern states. Thus, the board of directors of Accura Brake Company is considering expansion of its distribution to markets in the Midwest.
-Refer to Scenario 7.2. Last year, Accura Brake's sales to the manufacturers of lawn tractors declined partially due to the fact that more consumers were hiring small landscaping businesses to maintain their gardens. This decline in sales for Accura Brake is an example of:

Question

Quizplus · Accepted Answer

Derived demand occurs when the demand for one product is dependent on the demand for another product. In this case, the decline in sales to manufacturers of lawn tractors is due to the increased hiring of landscaping businesses, which reduces the demand for lawn tractors and consequently the demand for brake components.

Scenario 7.2 Use the Following Scenario to Answer the Questions