Microeconomics: Theory and Application

Microeconomics: Theory and Application

  • Study programme and level:The joint doctoral study programme Governance and Economics in the Public Sector (third cycle)
  • 2nd year
  • 5 ECTS
  • Course type: Elective course
  • Lectures: 20
  • Seminar: 20
  • Other forms of study: 20
  • Individual work: 90
  • Lecturer: Ljerka Cerović, PhD

1. Objectives and competences

Student:

  • to enable students to reach a deeper understanding of the key concepts of microeconomic theory with emphasis on the policy of determining the equilibrium price and quantity of a short and long term, going from the output market to the input market, from the perfect to the imperfect market conditions burdened with numerous market weaknesses and shortcomings,
  • to help students realize the importance, role and scope of microeconomic instruments in the analysis and in understanding the behavior of microeconomic entities in a constantly changing market environment,
  • to indicate to students the complementary and compliant relationship of descriptive, geometric and mathematical dimension of microeconomics as a scientific discipline, and thus provide the scientific foundation and gradual introduction in an increasingly more rigorous analytical instruments,
  • to provide students with the more complex forms of knowledge as to develop their economic intuition and critical distance for a deeper understanding and mastery of microeconomic models and problems,
  • to provide students with a complete understanding of classical microeconomic theory, as well as the modern development of microeconomic theory and its application,
  • to allow students to make a step from theoretical analysis to the application in real life, so they can see how in conditions of economic reality they make effective decisions based on economic theory.

Competences:

  • to train students for a deeper and more complex microeconomic considerations and analyses,
  • to train students to adopt complex microeconomic concepts and analytic instruments necessary for the understanding of economic processes,
  • to train students for a critical approach in considering application of certain microeconomic concepts and models in solving problems of microeconomics,
  • to develop students’ economic intuition and critical distance for a deeper understanding of microeconomic principles and events, not only at the theoretical level, in an ideal “laboratory conditions”, but in real-world conditions and practice of economic reality,
  • to train students to apply the microeconomic theory on the business reality in the field of behavior both of consumer and producers, especially in determining the price and quantity of production, and decision-making under conditions of uncertainty.

2. Content (Syllabus outline)

  • Theories of consumer behavior: traditional and contemporary approach; static and dynamic analysis
  • Production of homogeneous product versus optimal product assortment
  • Classical versus managerial theories of firm
  • Determination of price and quantity of production in different market situations
  • Policies of pricing determination in reality
  • Determination of prices in the market for factor inputs
  • Risk analysis and decision-making under conditions of uncertainty
  • Welfare economics, the theory of first and second-best solution
  • General equilibrium: static and dynamic analysis
  • Market weakness, market failures and measures of correction

3.  Readings

  • Benić, Đ.: Mikroekonomija: menadžerski pristup, prvo izdanje, Školska knjiga, Zagreb, 2012.
  • Pindyck, R. S. & Rubinfeld, D. L.: Microeconomics, 7th edition, Prentice Hall, New Jersey, 2009.
  • Salvatore, D.: Microeconomics: Theory and Applications, 5th edition, Oxford University Press, New York, 2008.
  • Carlton, D. W. & Perloff, J. M.: Modern Industrial Organization, 4th edition, Pearson International Edition, 2005.
  • Frank, R. H.: Microeconomics and Behavior, 5th edition, McGraw Hill, New York, 2003.
  • Wolfstetter, E.: Topics in Microeconomics: Industrial Organization, Auction and Incentives, Cambridge University Press, Cambridge, 2002.
  • Babić, M.: Mikroekonomska analiza, peto izdanje, MATE, Zagreb, 2000.
  • Koutsoyiannis, A.: Moderna mikroekonomika, drugo izdanje, MATE, Zagreb, 1996.

4. Intended learning outcomes

Student will master the key concepts of microeconomic theory, and realize the importance, role and scope of microeconomic instruments in the analysis and understanding of microeconomic phenomena and processes.
Students will master descriptive, geometric and mathematical logic necessary for a complete understanding of microeconomic theory and its application.
Student will also consider and adopt possibilities of application of the microeconomic theory in reality, especially in terms of managerial decision-making.
It is expected that the final outcome of learning will result in higher level of economic intuition and critical thinking in tackling complex microeconomic problems.

5. Learning and teaching methods

  • Lectures and seminars in class room; individual study and research work of students.
  • Lectures – contemporary topics in microeconomics theory and application.
  • Seminars – students present results of research work.
  • Individual study.
  • Research work of students – preparation of research paper in the field of microeconomics theory and application dealing with advanced microeconomic problem (analysis of the results, critical review, confirmation/refutation of the hypothesis).

6. Assessment

Research paper preparation and presentation 50%
Written exam 50%