The correct answer is: B. the firms producing at their minimum cost.
In a competitive equilibrium, firms produce at the point where marginal cost equals marginal revenue. This is the point where the firm is producing at its minimum cost.
Option A is incorrect because firms will not produce with excess capacity in a competitive equilibrium. If firms produce with excess capacity, they will be producing at a higher cost than necessary.
Option C is incorrect because firms will not produce at a cost higher than the minimum cost in a competitive equilibrium. If firms produce at a cost higher than the minimum cost, they will be losing money.
Option D is incorrect because all firms will produce at the same cost in a competitive equilibrium. This is because the firms are all producing at the point where marginal cost equals marginal revenue.