Step 1: Condition 1 โ Marginal Revenue equals Marginal Cost.
Profit is maximised when the additional revenue from selling one more unit (MR) is equal to the additional cost of producing that unit (MC).
Step 2: Condition 2 โ Total Revenue exceeds Total Cost.
Profit is maximised when the total revenue generated from sales is greater than the total cost of production. This ensures positive profit.
Step 3: Condition 3 โ Diminishing Returns.
As production continues, the marginal product of inputs begins to decline. Profit maximisation occurs when the firm adjusts its production level to balance costs and revenues effectively.