In a perfectly competitive market, what happens to the equilibrium price in the long run when firms are earning positive economic profits?

In a perfectly competitive market, when firms are earning positive economic profits, it attracts new firms to enter the market. This happens because the profits signal that there is an opportunity to make money. As new firms enter, the total supply of the product increases, which leads to a decrease in the market price. Eventually, the price will drop to the point where firms only earn normal profits, meaning they cover their costs but don’t make extra profits. For example, if a bakery is making high profits selling cakes, more bakers will start selling cakes, causing the price of cakes to go down until everyone in the market is just getting by without extra profits.