In responce to those suggesting using a toothpick; that would simply not solve the problem. It may mutilate the red light, but will not fix the audio.
This is a common software issue on Mac OS X 10.7.5 and earlier versions. Unfortunately there was not software hotfix ever released.
The problem you are experiencing is that the computer does not recognize the "internal speakers" as an active sound component.
To remedy this issue, try the following...
1 Reboot your Mac (if you hear the 'ding' sond, then the speakers are physically OK)
2 If the problem still exists go to folder \Library\Preferences\Audio\ and delete the two files inside the folder.
You should be asked to supply your account password to allow the computer to do this.
What this action does is reset the potentially corrupted audio prefrences. Your sound should immediately return after this action. Thank you!