Shifts in Demand and Supply Curves for New Cars

Steps:

• Identify demand shift to D₁ as rightward (increase), caused by factors like easier credit access.
• Identify supply shift to S₁ as leftward (decrease), caused by costs like taxes on producers.
• Evaluate options: increase in loans boosts buyer purchasing power, shifting demand right; specific tax raises production costs, shifting supply left.
• Confirm C matches both shifts uniquely.

Why C is correct:

• Increased loan availability lowers effective price of cars, increasing quantity demanded at each price (law of demand); specific tax increases marginal cost, decreasing quantity supplied at each price (supply curve derivation).

Why the others are wrong:

• A: Both shifts are rightward (petrol price fall boosts car demand as complement; subsidy lowers costs).
• B: Both shifts are leftward (fewer loans reduce demand; tax reduces supply).
• D: Both shifts are rightward (higher train prices boost car demand as substitute; more producers increase supply).

Final answer: C