The presence of supernormal profits at $P_1$ attracts new firms due to freedom of entry, shifting market supply from $S_1$ to $S_2$ and lowering price to $P_2$. At the long-run equilibrium price $P_2$, the firm is both productively efficient ($P_2=\min (ATC)$) and allocatively efficient ($P_2=MC$).

The presence of supernormal profits at $P_1$ leads existing firms to increase individual output to $Q_2$, shifting market supply from $S_1$ to $S_2$. At the long-run equilibrium price $P_2$, the firm is productively efficient ($P_2=\min (ATC)$) but allocatively inefficient because $P_2>MC$.

Firms facing high barriers to entry restrict industry supply to $S_2$ to maintain market share, driving the price down to $P_2$. At the long-run equilibrium price $P_2$, the firm earns supernormal profits and is neither productively nor allocatively efficient.

The existence of subnormal profits at $P_1$ causes firms to exit, shifting market supply from $S_1$ to $S_2$ and lowering price to $P_2$. At the long-run equilibrium price $P_2$, the firm achieves productive efficiency but fails to achieve allocative efficiency as $P_2\ne MC$.