Final Answer:
The equilibrium price is the point at which the quantity consumers want to buy (demand) equals the quantity producers want to sell (supply). Above the equilibrium price, there would be a surplus of candy bars due to producers supplying more than consumers are willing to buy. Below the equilibrium price, a shortage would occur as demand exceeds the quantity supplied.
Step-by-step explanation:
In a market, the equilibrium price is determined by the intersection of the demand and supply curves. At this point, the quantity demanded equals the quantity supplied. Mathematically, it can be represented as Qd = Qs. Above the equilibrium price, where P > Pe (equilibrium price), the quantity supplied exceeds the quantity demanded, resulting in a surplus. This surplus occurs because producers are motivated to supply more at higher prices, but consumers are less willing to buy.
Conversely, below the equilibrium price, where P < Pe, there is a shortage. Producers are less willing to supply at lower prices, while consumers are eager to buy more at the lower cost. The shortage represents the gap between what consumers want and what producers are willing to supply. This dynamic of surplus and shortage is a fundamental concept in economics, illustrating how market forces influence price and quantity.
To determine the price to charge, one would ideally set the price at the equilibrium point to achieve a balance between supply and demand, ensuring that neither a surplus nor a shortage occurs. This helps maximize market efficiency and benefits both producers and consumers.