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29 June, 12:17

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?

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  1. 29 June, 12:40
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    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
    qd = 4,000

    qs = 7,000

    More suppliers are willing to sell than consumers are willing to buy.
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