Final answer:
Equilibrium quantity is the level at which the quantity demanded and supplied in a market are equal at the equilibrium price, and it indicates there is no surplus or shortage of the product. The equilibrium price is the specific price point where this balance is achieved, and the factors of production determine the potential supply.
Step-by-step explanation:
Equilibrium quantity is defined as the amount of goods or services that are supplied and demanded at the equilibrium price. This equilibrium price is where the quantity demanded by consumers is equal to the quantity supplied by producers, resulting in no unwanted surplus or shortage in the market. The factors of production, such as labor, materials, and machinery, contribute to the supply side of this equation by determining how much of a good or service can be produced.
For example, consider a coffee market where the equilibrium price is set at $4, and both consumers are willing to purchase, and producers are willing to supply, 200 million pounds of coffee. At this price level, neither excess demand (shortage) nor excess supply (surplus) exists. Thus, the equilibrium quantity would be the 200 million pounds of coffee exchanged in the market at the $4 price point.