ABSTRACT

Microeconomics is principally concerned with the behaviour of individual participants in the economy. Whilst the prefix ‘micro’ suggests a concern with small units, not all these participants – usually referred to as economic agents – are small in any absolute sense, since as well as individuals they include firms, governments, trade unions and many other organizations. They are nevertheless the basic decision-making units of an economic system and, despite their diversity and size, economists believe that their behaviour can usefully be analysed in the context of a common analytical framework. Traditionally, of these economic agents, individuals and firms have been the main focus of attention and that is reflected in this book. But in recent years particularly, the same analytical approach has been increasingly applied to other organizations, and some of the results of that work are also reflected in later chapters.