Your firm manufactures motorcycles for the consumer market. You purchase raw materials to build the motorcycles from a variety of suppliers in the U.S. and abroad. The volume of your raw materials purchases is a function of the customer demand for your firm's motorcycles. Which of the following best describes the type of demand your firm has for these raw materials?

Question

Quizplus · Accepted Answer

The best description of the demand for raw materials used to build the motorcycles is derived demand. This means that the demand for the raw materials is a result of the demand for the final product, in this case, motorcycles. As customer demand for motorcycles increases, so does the demand for raw materials to build them.

Your Firm Manufactures Motorcycles for the Consumer Market