What Is Profit Maximization? Or If Profit Maximization Is Not Merely Making the Bottom line as Large as Possible, Then What Is It?

Any analysis of profit maximization begins and ends with the people who are involved in business: What is it that these people do? They engage in the human behavior of allocating the scarce resources that produce the goods and services the community wants. Stated another way, businesspeople are resource allocators. That is their profession; that is their mandate.

There is a directive that comes with this responsibility of being a resource allocator. Businesspeople must allocate scarce resources efficiently! And how do businesspeople allocate scarce resources efficiently? They do it by adhering to the principles inherent in profit maximization, also referred to as profit maximizing.

Rather than concentrating on the bottom line, profit maximization focuses on the behavior that leads directly to bottom-line profits and losses. Rather than concentrating on numbers, profit maximization focuses on all of those human activities that generate these numbers.

When I use the phrase H profit maximization" or "profit maximizing," I am referring to everything and anything that goes into good business. Stated another way, profit maximization refers to everything that goes into converting scarce resources into what people want and doing it efficiently.