Zagrebačka škola ekonomije i managementa
Syllabus: Microeconomics I
SYLLABUS
Microeconomics I
(ECTS 7)
LECTURERS
Lecturers
Krešimir Žigić
Tomislav Vukina
Gordi Sušić
Contact
E-mail:
kresimir.zigic@cerge-ei.cz
vukina@ncsu.edu
gordi.susic@hnb.hr
COURSE DESCRIPTION
The Microeconomics 1 course introduces students to principles of microeconomic theory at a
relatively advanced level. Students attending the course will become familiar with the most
important models that economists use trying to explain the behaviour of consumers and firms which
are central to the study of all areas of economics (micro foundations). Since microeconomic models
are constructed using a wide variety of mathematical tools, students that complete the course will
deepen their knowledge of optimization techniques and will become familiar with a special type of
functions and their properties that are essential in solving economic problems. Course is followed by
Microeconomics 2 (summer semester) that focuses on imperfect market structures, labour supply
and labour markets as well as inefficiencies arising from moral hazard and adverse selection.
HOURS
Lectures
Exercises
Total
30 hrs (15 weeks  2 hrs)
30 hrs (15 weeks  2 hrs)
60 hours
PREREQUISITES
Students are expected to have mastered elements of statistics (concept of random variable, its first
and second moments) and mathematics (linear algebra, differential and integral calculus).
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Zagrebačka škola ekonomije i managementa
Syllabus: Microeconomics I
GRADING
Students can complete the course Microeconomics 1 by successfully passing one midterm and (one)
final (winter) semester exam. Both midterm and semester final exam will be in the written form
carrying equal weight (50%). Final positive grade will be determined as the average of two pass or
higher grades achieved on midterm and semester final exam using the following scale:
90 -100% = excellent (5),
80 - 89% = very good (4),
70 - 79% = good (3),
55 - 69% = pass (2).
Students with only one successfully completed exam (midterm or semester's final) will have one
opportunity to retake exam they failed or were not able to attend (resit).
Students that didn't pass the course taking midterm and semester's final exam (including resit) will
have four opportunities to take the complete final exam in written form. Final positive grade in that
case will be determined using the following scale:
90 -100% = excellent (5),
80 - 89% = very good (4),
70 - 79% = good (3),
60 - 69% = pass (2).
PRELIMINARY COURSE OUTLINE
Week 1) Introduction to Microeconomic Theory (Syllabus, Market Economy and Resource
Allocation, Perfect and Imperfect Competition, Role of Models in Economics; Review of
Differentiation Rules, Partial and Total Derivatives, Simple Integration)
Week 2) Consumer Preference Theory (Modern Theory of Consumer Preference, Cardinal versus
Ordinal Utility, Utility Function Axioms, Revealed Preferences and Indifference Curves)
Week 3) Individual Consumer (Theoretical and Graphical Development of Consumer Demand
Functions, Changes in Demand and Changes in Quantity Demanded, Cobb-Douglas Demand
Functions)
Week 4) Market Demand Theory (From Generalized to Market Demand Functions, Changes in
the Parameters of Market Demand)
Week 5) Utility Optimization (Techniques for Solving Two Variable Constrained Optimization
Problems, Lagrange Method, Non-negativity and Inequality Constraints: The Kuhn-Tucker Method)
Week 6) Elasticity of Individual and Market Demand Functions (Elasticity of Demand along
Linear and Nonlinear Demand Curves, Elasticity and Total Revenue, Income Elasticity, Cross Price
Elasticity, How Estimates of Elasticity are Used for Policy Analysis)
Week 7) Compensated Demand Function (Compensated Demand Function, Expenditure
Function, Income and Substitution Effect, Slutsky Equation)
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Syllabus: Microeconomics I
Zagrebačka škola ekonomije i managementa
Week 8) Efficiency and Trade: An Application of Consumer Demand Theory (Efficiency,
Trade in the Edgeworth Box, Solving for Competitive Equilibrium, Distributional Problem)
Week 9) Production Theory (Production Function, Isoquants, Output Expansion in the Short and
Long Run, Diminishing Returns)
Week 10) Cost Functions 1 (Economic Versus Accounting Costs, Costs Minimization, Short Run
Costs)
Week 11) Costs Functions 2 (Long Run Costs, The Relationship Between Short-run and Long-run
costs)
Week 12) Profit Maximization by a Competitive Firm: Supply of Goods and Demand for
Inputs (Competitive Profit Maximization and Short-run Supply, Profits and Short-run Shutdown,
Short-run Input Demand Functions, Sunk Costs and Economic Decision Making)
Week 13) Competitive Market Supply and Market Equilibrium (Short-run Equilibrium, From
Short-run to Long-run Equilibrium, Long-run Market Supply under Competition)
Week 14) Market Equilibrium and Comparative Statics (Short-run and Long-run Adjustments
to changes in Demand and Supply Parameters, Comparative Statics and Incidence of Per-unit Tax)
Week 15) Production Efficiency and General Equilibrium of Competitive Markets (Pareto
Optimality, Comparative Statics in General Equilibrium Framework)
READING LIST
B. Binger and E. Hoffman (1998), Microeconomics with Calculus, Addison Wesley, 2nd
Edition
W. Nicholson and C. Snyder (2008), Microeconomic Theory: Basic Principles and
Extensions, Thompson South-Western, 10th Edition
H. Gravelle and R. Rees (2004), Microeconomics, Prentice Hall, 3rd Edition
Related literature:
C. Simon and L. Blume (1994), Mathematics for Economists, Norton
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