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By FrankA.Cowell

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There is no magic bullet to blow away the market as an institution, but an understanding of microeconomic principles can help in appraising the various possibilities for modifying market mechanisms and piecemeal solutions for overriding or replacing particular markets. 2 Some tips You will probably …nd it useful to check through the brief summary of mathematics in Appendix A. There you will also …nd some suggestions for further reading if you are a bit rusty on certain techniques. You should be certain to check carefully the list of symbol conventions used throughout the book –see page 485.

2 Some tips You will probably …nd it useful to check through the brief summary of mathematics in Appendix A. There you will also …nd some suggestions for further reading if you are a bit rusty on certain techniques. You should be certain to check carefully the list of symbol conventions used throughout the book –see page 485. The proof of some of the results are hived o¤ to Appendix C. This is not because the results are not interesting, but because the method of proof is not particularly illuminating or is rather technical.

Bill Gates, US News and World Report, 15 February 1993. 1 Basic setting We begin with the economic problem of the …rm, partly because an understanding of this subject provides a good basis for several other topics that arise later in the book, partly because the formal analysis of this problem is quite straightforward and can usually be tied into everyday experience and observation. We will tackle the issues that arise in the microeconomic analysis of the …rm in seven stages. The …rst four of these are as follows: We analyse the structure of production and introduce some basic concepts that are useful in solving the …rm’s optimisation problem.

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