Article 4: he Maximization Hypothesis

A fundamental behavioral assumption on which many microeconomic models rest is the maximization hypothesis - the assumption that an economic agent attempts to maximize something. For instance, consumers are assumed to seek maximum utilities or satisfactions; firms or producers are assumed to attempt to maximize their profits, sales receipts, or market shares; and resource owners are assumed to be after maximum wages, rentals, etc. The other side of the coin of the maximization hypothesis is the minimization of something undesirable. Thus, firms are assumed to seek minimum losses, and households are assumed to try to minimize their disutilities.