<p>You don't need more detail, you need less:</p>

<p>Suppose a firm could make production choice A, or production choice B.  Suppose the firm chooses A, and is maximizing profits.  Then, this implies that the firm is making <em>as much or more</em> profits as it would make if it had chosen B.</p>

CC BY-SA 4.0
2019-10-04T01:01:48.557Z
Wow now I get it. Thank you so much. Would upvote but I dont have 15 karma yet.
Christopher Fritzke
CC BY-SA 4.0
2019-10-04T23:35:53.623Z
Well, when you do... ;)
heh
CC BY-SA 4.0
2019-10-04T23:36:31.610Z
Also, please mark it as having answered your question, if it did!
heh
CC BY-SA 4.0
2019-10-03T20:01:49.597Z
2019-10-03T20:01:49.597Z
heh
<p>In Hal Varian's Book "Microeconomic analysis" on page 35 he gives the following description of a profit maximising firm.</p>

<p>"...If the firm is maximising profits, then the observed net output choice at price pt must have a level of profit at least as great as the profit at any other net output the firm could have chosen. We don't know all the other choices that are feasible in this situation, but we do know some of them-namely, the other choices <span class="math-container">$y_s$</span> for <span class="math-container">$s=1,...,T$</span> that we have observed. Hence, a necessary condition for profit maximisation is that
<span class="math-container">$p_ty_t≥p_ty_s$</span>
for all <span class="math-container">$t$</span> and <span class="math-container">$s=1,...,T$</span>.</p>

<p>"We will refer to this condition as the Weak Axiom of Profit Maximisation (WAPM)."</p>

<p>I dont understand this can I get a more detailed drawn out explanation as if I'm five, or a reference to where I can further information on this?</p>

<profit-maximization>
Can I get a more detailed explanation of the Weak Axiom of Profit Maximization?
Christopher Fritzke
# Can I get a more detailed explanation of the Weak Axiom of Profit Maximization?

(Asked by: username_0 on 2019-10-02)

In Hal Varian's Book "Microeconomic analysis" on page 35 he gives the following description of a profit maximising firm.

"...If the firm is maximising profits, then the observed net output choice at price pt must have a level of profit at least as great as the profit at any other net output the firm could have chosen. We don't know all the other choices that are feasible in this situation, but we do know some of them-namely, the other choices $y\_s$ for $s=1,...,T$ that we have observed. Hence, a necessary condition for profit maximisation is that
$p\_ty\_t≥p\_ty\_s$
for all $t$ and $s=1,...,T$.

"We will refer to this condition as the Weak Axiom of Profit Maximisation (WAPM)."

I dont understand this can I get a more detailed drawn out explanation as if I'm five, or a reference to where I can further information on this?

**Tags:** profit-maximization


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## 1 answers

### Answer by username_1 on 2019-10-03. Score: 1

You don't need more detail, you need less:

Suppose a firm could make production choice A, or production choice B. Suppose the firm chooses A, and is maximizing profits. Then, this implies that the firm is making *as much or more* profits as it would make if it had chosen B.

> **Comments:**
> **username_0**: Wow now I get it. Thank you so much. Would upvote but I dont have 15 karma yet.  
> **username_1**: Well, when you do... ;)  
> **username_1**: Also, please mark it as having answered your question, if it did!  

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