For profits to be maximum at $q_o$, which of the following condition is NOT necessary under perfect competition?

none of the above

The correct answer is Option 4: none of the above

All the given conditions are necessary for profit maximization under perfect competition.

1. The price, p, must equal MC – Necessary

   • The profit-maximizing condition in perfect competition is when Marginal Cost (MC) = Price (p).
   • If MC < p, the firm should increase output to maximize profit.
   • If MC > p, the firm should reduce output.

2. Marginal cost must be non-decreasing at $q_o$​ – Necessary

   • For a firm to maximize profits at $q_o$​, MC must be rising (non-decreasing) at this point.
   • This ensures that the firm is at the profit-maximizing output rather than a minimum profit/loss point.

3. In the short run, price must be greater than or equal to the average variable cost (p  ≥ AVC) – Necessary

   • If p < AVC, the firm should shut down because it cannot even cover its variable costs.
   • If p > AVC, the firm continues to produce as it covers variable costs and contributes to fixed costs.
   • If P = AVC, the firm continues to produce as it covers variable costs.