A Level Economics (9708)•9708/13/M/J/21

Explanation
Cross Elasticity and Demand Change Steps:
- %ΔQ for 1200cc = -0.25 × 100% = -25%; ΔQ = -25% × 10,000 = -2,500 cars.
- %ΔQ for 2000cc = -0.50 × 100% = -50%; ΔQ = -50% × 5,000 = -2,500 cars.
- Total ΔQ = -2,500 + (-2,500) = -5,000 cars per week.
- Initial total sales: 15,000; new total: 10,000, a decrease of 5,000.
Why C is correct:
- Cross elasticity formula (%ΔQ_A / %ΔP_B) shows negative values for complements; here, 100% petrol rise causes -25% and -50% drops in car quantities, totaling -5,000.
Why the others are wrong:
- A: Demand falls due to negative elasticities, not rises.
- B: Elasticities predict a response to petrol price change.
- D: Combined decrease is 5,000, not 15,000.
Final answer: C
Topic: Price elasticity, income elasticity and cross elasticity of demand
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