Which of the following conditions must hold for a firm to maximise its profit.

(A) Price= Short run marginal Cost

(B) Short Run marginal cost curve is non-decreasing

(C) Price ≤ Marginal Cost

(D) Price ≥ Average variable cost

Choose the correct answer from the options given below:

Option 1 -> Includes (C) which states Price ≤ Marginal Cost, but profit maximization requires Price = Marginal Cost, not inequality.

Option 2 -> Includes (C) which is incorrect as it suggests Price ≤ Marginal Cost instead of equality, and excludes (D) which is necessary for the shutdown decision.

Option 3 -> Includes all conditions, but (C) is incorrect since profit maximization requires Price = Marginal Cost, not Price ≤ Marginal Cost.

Option 4 -> Correctly includes (A) Price = Short run MC (first-order condition), (B) MC curve is non-decreasing (second-order condition), and (D) Price ≥ AVC (shutdown condition), while excluding the incorrect condition (C).

Hence, Option 4: (A), (B) and (D) only -> For profit maximization, three conditions must hold: (A) P = MC is the first-order condition where marginal revenue equals marginal cost; (B) MC curve must be non-decreasing (rising) at the equilibrium point to satisfy the second-order condition ensuring maximum not minimum profit; (D) P ≥ AVC ensures the firm doesn't shut down in the short run. Condition (C) is incorrect because profit maximization requires equality (P = MC), not inequality (P ≤ MC). -> correct