Question

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 percent of the previous price. This policy is called a:
A) laissez faire policy.
B) price floor.
C) price ceiling.

Answer 1

Answer:

C) price ceiling

Explanation:

Price ceiling is the price control or the limit which is imposed by the government on how high the price can be charged for the particular commodity, product, or service.

Governments often use price ceilings in order to protect the consumers from conditions which could make the commodities prohibitively expensive.

Thus, President Chávez to reduce the price to 50 percent of previous price comes under the policy of price ceiling.