In terms of supply, what does the term “equilibrium” refer to?

The term "equilibrium" in the context of supply refers to the point where the quantity of goods supplied equals the quantity of goods demanded in the market. At this equilibrium point, the market is balanced, meaning there is no surplus or shortage of the product. Sellers are able to sell all the goods they produce at the prevailing market price, and buyers are satisfied with the quantity available at that price. This concept is crucial in microeconomics as it illustrates how market forces interact to determine prices and quantities in a competitive market environment.

In contrast, maximum willingness to produce or minimum willingness to pay are specific aspects of individual seller or buyer behavior, not the overall market condition that defines equilibrium. Similarly, the stability of a market speaks to the broader concept of market dynamics rather than pinpointing the specific interaction between supply and demand that defines equilibrium. Therefore, defining equilibrium in terms of the intersection of supply and demand captures the fundamental balance that characterizes a functioning market.