MICROECONOMIC THEORY AND POLICY

individuals and firms, and the interaction of these agents in the market. It also examines the effects of government policies, market power and externalities on market efficiency. Recently there have been significant developments in areas of microeconomic policy, such as privatization and competition policy. There are also currently a number of key corporate governance matters under discussion that are likely to have important implications for the relationships between the main stakeholders of firms and for corporate objectives. In order to appreciate the key factors involved in these and other microeconomic issues, it is necessary to develop an understanding of the conceptual tools and underlying analytical framework and how it can be applied to particular situations. This involves exploring the fundamental decisions made by economic agents as producers, consumers and suppliers of factors of production.