An introduction to economic analysis and methodology; highlights the relevance of economics to business. In microeconomics the unit examines the behaviour of firms, their internal decision-making under alternative market structures and the impact of these decisions on the wider community. The rationale for government involvement in specific markets and the methods available to government for dealing with market imperfections are also discussed.

The macroeconomic component of the unit examines the key dimensions of the macroeconomic environment including the various measures of economic activity. It also deals with unemployment, inflation, exchange rates and interest rates as environmental factors impinging on firms. The emphasis is on the relevance to businesses of the performance of the major economic aggregates and the impact of government macroeconomic policies on economic activity in general and on firms in particular.