What is the market condition for firms in long-run equilibrium?

In long-run equilibrium, firms in a perfectly competitive market operate at a point where they earn normal profits, which means they break even. This occurs because, in the long run, the entry and exit of firms in the market lead to adjustments in supply until the market price equals the minimum average total cost (ATC). This level of output ensures that firms can cover all their costs, including both explicit and implicit costs.

When firms are earning economic profits, new firms are incentivized to enter the market, increasing supply and driving down prices until profits are eliminated. Conversely, if firms are incurring losses, some will exit the market, decreasing supply and raising prices until only normal profits are achieved again. Therefore, in the long-run equilibrium, firms do not earn excess profits or losses; they earn just enough to cover their costs, leading to a situation where they break even.