Final answer:
In a free market without government intervention, the equilibrium price and quantity are determined by the intersection of the demand and supply curves. This equilibrium reflects a natural balance where quantity demanded equals quantity supplied without shortages or surpluses. Government interventions can disrupt this equilibrium, causing market inefficiencies.
Step-by-step explanation:
The student's question seems to revolve around the concept of market equilibrium and government intervention in the context of economics. The phrase 'invisible hand', mentioned in the reference information, implies the market forces of demand and supply that lead to the equilibrium state within a free market. In the absence of government intervention, the equilibrium in each country, in terms of price and quantity, would be determined by the intersection point of the demand and supply curves. This is because buyers and sellers freely interact to agree on a price at which they are both willing to trade, which is the equilibrium price. Likewise, the quantity traded at this price is known as the equilibrium quantity. You can tell this has been achieved when there is no shortage or surplus in the market; that is, the quantity supplied equals the quantity demanded at the equilibrium price.
When a market is free and operating without government intervention, the equilibrium price and quantity are reached naturally. This allows resources to be allocated efficiently, as the prices reflect both the cost of production and consumer preferences. However, when governments do intervene—either by setting price floors to prevent prices from falling too low or price ceilings to prevent them from rising too high—this can lead to excess supply or excess demand and result in market inefficiencies.