Equilibrium in a perfectly competitive market refers to a state where the quantity demanded by consumers is equal to the quantity supplied by producers at a specific price level. In this market structure, numerous buyers and sellers participate, and there is free entry and exit of firms. To achieve equilibrium, certain conditions must be met:

1. Demand and Supply
In a perfectly competitive market, the demand and supply curves determine the equilibrium price and quantity. The demand curve represents the quantity of a good or service that consumers are willing and able to purchase at various price levels. The supply curve, on the other hand, represents the quantity of a good or service that producers are willing and able to offer at different prices. The equilibrium price and quantity occur at the point where the demand and supply curves intersect.

2. Market Clearing
Market clearing is an essential condition for equilibrium. It implies that the quantity demanded equals the quantity supplied, resulting in no excess supply or demand. At the equilibrium price, buyers are willing to purchase exactly the quantity that sellers are willing to provide. This balance ensures that all goods are sold, and there are no shortages or surpluses in the market.

3. Individual Rationality
In a perfectly competitive market, buyers and sellers are rational decision-makers who aim to maximize their utility or profits. Each participant has perfect information about prices and market conditions. Therefore, for equilibrium to exist, it is necessary that buyers are willing to purchase at the prevailing price and sellers are willing to sell at that price. If either party is not satisfied with the market price, they will adjust their behavior, leading to a new equilibrium.

4. Free Entry and Exit
Perfectly competitive markets allow for free entry and exit of firms. This means that new firms can easily enter the market if they see an opportunity for profit, and existing firms can exit if they are making losses. The presence of free entry and exit ensures that no firm has the power to influence the market price. In equilibrium, the number of firms in the market is optimal, and there is no incentive for new firms to enter or existing firms to exit.

In conclusion, equilibrium in a perfectly competitive market is achieved when the quantity demanded equals the quantity supplied, the market clears, buyers and sellers are satisfied with the prevailing price, and there is free entry and exit of firms. These conditions ensure a state of balance in the market, where prices and quantities are determined efficiently.