Zagrebačka škola ekonomije i managementa
Syllabus: Microeconomics II
SYLLABUS
Microeconomics II
(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
Microeconomics 2 follows Microeconomics 1 course. First part of the winter semester lectures and
exercises is devoted to theory and problems of imperfect market structures (monopoly, duopoly,
oligopoly, cartels and monopolistic competition) as well as structures' implications on society's
welfare. The course extends consumer model developed in Microeconomics 1 to a choice between
consumption and leisure and, ultimately, provides insights into some interesting features of labour
markets and its imperfections. The course ends with a part focusing on resource allocation under
uncertainty (contingent claims, moral hazard, adverse selection and signalling) and resource
allocation with externalities and public goods.
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 theory taught and problem sets solved during
Microeconomics 1 course.
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Zagrebačka škola ekonomije i managementa
Syllabus: Microeconomics II
GRADING
Students can complete the course Microeconomics 2 by successfully passing one midterm and (one)
final (summer) 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 will in
that case 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) Perfect Competition versus Imperfect Market Structures (Efficient Market Hypothesis
and Market Failure, Market Power, Introduction to Various Forms of Imperfect Market Structures)
Week 2) Monopoly (Profit-maximizing Output and Input decisions Under Monopoly, Welfare Loss
from Monopoly, Natural Monopoly and Regulation, Multiplant Monopoly)
Week 3) Price Discrimination (Price Discrimination Forms, Role of Market Fences in Price
Discrimination)
Week 4) Game Theory (Zero and Non-zero Sum Games, Decision Trees and Backward Induction,
Repeated Games and Tacit Collusion)
Week 5) Oligopoly and Imperfect Competition (Cournot Duopoly Model and Extensions,
Stackelberg Model, Bertrand Model)
Week 6) Monopolistic Competition (Monopolistic Competition in the Short-run; Monopolistic
Competition in the Long-run)
Week 7) Time Allocation, Labour Supply and Labour Markets (Simple Model of Time
Allocation and Labour Supply, Competitive Labour Market Equilibrium, Wage Differentials in a
Competitive Markets)
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Syllabus: Microeconomics II
Zagrebačka škola ekonomije i managementa
Week 8) Imperfect Labour Markets (Imperfect Labour Markets, Economic Rent and Welfare
Implications of Monopsony, Unions)
Week 9) Inter-temporal Decisions (Two-period Inter-temporal Decision Model, Supply Function
for Savings, Discounted Present Value, Determining the Equilibrium Rate of Interest)
Week 10) Probability Theory and Risk Preference (Introduction to Probability Theory and Risk
Preference, Expected Utility and Von Neumann-Morgerstern Utility Function)
Week 11) Contingent Claims (Insurance Markets, Futures Contracts; Contingent Claims and Statepreference Model)
Week 12) Moral Hazard (Inefficiencies associated with Unobservability, Moral Hazard in Insurance
Markets)
Week 13) Adverse Selection (Adverse Selection, Principal Agent Problem, Market for Lemons,
Reputation, Signalling, Warranties)
Week 14) Externalities (Positive and Negative Externalities, Optimal Levels and Optimal
Allocation of Externalities)
Week 15) Public Goods and Public Decision Making (Public Goods, Externalities and Public
Goods, Pigouvian Taxes and Lindahl Prices, Free Riding, Coasian Bargaining)
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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