Leftward demand shift indicates decreased demand for new cars

Steps:

• Recall that a leftward demand curve shift occurs when non-price factors reduce quantity demanded at every price.
• Identify demand shifters: income, prices of related goods, tastes, expectations, and other factors like financing costs.
• Evaluate each option: Check if it decreases demand for cars (normal good, financed purchase, substitutes/complements).
• Select the option that raises the effective cost of owning a car without changing its market price.

Why C is correct:

• Higher borrowing costs (interest rates) increase the total cost of financing a car purchase, reducing demand per the demand shifter for credit-dependent goods.

Why the others are wrong:

• A: Higher disposable income increases demand for normal goods like cars, shifting the curve right.
• B: Higher production costs shift the supply curve left, not demand; it causes a movement along the demand curve.
• D: Higher train prices make trains (a substitute) less attractive, increasing car demand and shifting the curve right.

Final answer: C