This strategy is based on the fact that the total profit reaches its maximum point where marginal revenue equals marginal profit. This is the case because the firm will continue to produce until marginal profit is equal to zero, and marginal profit equals the marginal revenue (MR) minus the marginal cost (MC).

Explanation:

Profit Maximization:
Profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. In other words, it is the point where a company can increase its profits by either increasing revenue or reducing costs.

MR=MC:
The condition for profit maximization is when a firm produces at a level where marginal revenue (MR) is equal to marginal cost (MC). This is because at this point, the firm is producing the optimal level of output where the cost of producing an additional unit is equal to the revenue generated from that unit.

MR, MC, AC, and AR:
To understand the condition for profit maximization, we need to understand the following terms:

- Marginal Revenue (MR): Marginal revenue is the additional revenue generated by selling one more unit of a product.
- Marginal Cost (MC): Marginal cost is the additional cost incurred by producing one more unit of a product.
- Average Cost (AC): Average cost is the total cost of producing a product divided by the number of units produced.
- Average Revenue (AR): Average revenue is the total revenue generated by selling a product divided by the number of units sold.

Why MR=MC is the condition for profit maximization:
If MR is greater than MC, the firm can increase its profits by producing more units. If MR is less than MC, the firm can increase its profits by producing fewer units. Therefore, the optimal level of output is where MR is equal to MC. At this level of output, the firm is producing the optimal number of units where the cost of producing an additional unit is equal to the revenue generated from that unit.

Conclusion:
In conclusion, the condition for profit maximization is when a firm produces at a level where MR is equal to MC. This is because at this point, the firm is producing the optimal level of output where the cost of producing an additional unit is equal to the revenue generated from that unit.

This is the case because the firm will continue to produce until marginal profit is equal to zero and marginal profit equals the MR-MC.If a firm produce past that point then marginal revenue is less than marginal cost .This means that the firm is losing profit with each additional unit of output .