One of the big neoclassical assumptions about firm behavior is that they maximize profits meaning they try to maximize the difference between total revenue and total cost. However, weve seen several instances throughout the course where this doesnt seem to be true. First, weve seen firms like Amazon price products below what it cost to produce them (revenue from product is not enough to cover the cost of the product). Second, weve seen that firms tend to pay worker more than the lowest wage possible (reservation wage).

Explain what firms are attempting to do in these two situations. Discuss whether these actions truly represent a deviation from firms attempting to maximize profits.