In the past year, there has been a large drop in the number of new car

I don't get it, how can the unaffected price of expensive cars result in increase in the Average price of all cars

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Consider option C which says the price is unaffected. Let price of the expensive car be 1000$, and inexpensive car be 500$.
There's a drop in the number of cars sold, but the average has increased.

If 5 of these 1000$ expensive cars are sold, then the average stays 1000$. But if you consider 4 inexpensive cars (500$) 1 expensive car, the average drops to 600$.

(Also a point you can think about, unrelated - only the lower-middle class ppl would normally be affected by the harsh economic conditions. High class people are normally not affected. They would probably continue to buy their expensive cars regardless of the economic conditions, but the inexpensive cars market would sell less numbers, reducing the overall number sold. Just a thought. Not saying it's the right thing to think 😅)

Maybe people are only buying the expensive cars, whose market value has not reduced. That would solve the paradox!