PROFIT MAXIMIZATION: The process of obtaining the highest possible level of profit through the production and sale of goods and services. The profit-maximization assumption is the guiding principle underlying short-run production by a firm. In particular, it is assumed that firms undertake actions and make the decisions that increase profit. The profit-maximization assumption is the production counterpart to the utility-maximization assumption for consumer behavior. See also | profit | total revenue | total cost | firm | production | short-run production | utility maximization | perfect competition | monopoly | monopolistic competition | oligopoly |
