Hugo Chávez was the president of Venezuela.Venezuela is a major producer of oil products,which remain a critical component of Venezuela's economy.Suppose President Chávez wanted to increase his popularity with the citizens of Venezuela and enacted a government policy to reduce the price of gasoline sold at state-owned gas stations to 50% of the previous price.Assuming a downward-sloping demand curve for gasoline,in theory,this policy would result in a quantity of gasoline demanded that is _____ the quantity of gasoline supplied.

Question

Quizplus · Accepted Answer

With the reduction in the price of gasoline, the demand for gasoline would increase, resulting in a greater quantity of gasoline demanded than supplied. This is because the price and quantity demanded of gasoline have an inverse relationship according to the law of demand. As a result, quantity demanded will rise as the price falls, leading to a higher quantity demanded than before the price change.

Hugo Chávez Was the President of Venezuela