In the market for used cars, the demand and supply equations are given by qd = 12,000 – 0.4p and qs = 0.1p + 5,000, where p is the price per car and q measures the quantity of cars. what happens at a price floor of $20,000?
In this case you simply plug in 20,000 for p in both of the equations and then compare the values. If qd>qs then there is a inventory shortage. If qd<qs then you have a surplus.
qd= 4,000
qs = 7,000
More suppliers are willing to sell than consumers are willing to buy.
