Hugo Chávez was the president of Venezuela. Venezuela is a major producer of oil products, which remain the keystone 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 the quantity of gasoline demanded to be _____ the quantity of gasoline supplied.

Question

Quizplus · Accepted Answer

Reducing the price of gasoline would increase the quantity demanded, potentially leading to a situation where demand exceeds supply, especially if the supply is not increased to match the higher demand.

Hugo Chávez Was the President of Venezuela