Introductory Macro and Microeconomics

Subject	Introductory Macro and Microeconomics
Semester	1st semester (autumn)
Type	Required
ECTS	9 ECTS
Study programme:	Business studies (undergraduate)
Primary language:	Slovene

Introduction
This course will be taught in Slovene language and is obligatory in the official course syllabus for the Bachelor Degree in Business Studies Programme. This course is divided into two parts. The first part - Macroeconomics - will cover the basic concepts for understanding the economy on aggregate level. The second part – Microeconomics - will cover the basic concepts for understanding the behaviour of individual economic agents, consumers and producers, as well as an introduction to market structures, especially perfect competition.
 
Pre-course requirements
Students should understand basic terms of economics of an enterprise, enterprise business and management, from high school syllabuses. This course uses mathematical techniques that should be previously known by students: first and second degree equations; derivatives and partial derivatives. Students should have sufficient knowledge of English language to be able to communicate with lecturers and students, to follow the lectures and understand the study materials that will be provided within the course.
 
Objectives

1. To introduce student to the basic economic problem and to the field of macro and microeconomics.
2. To teach students how to use basic economic terms and how to think as an economist.
3. To develop a capability of analysing causes and consequences of economic phenomena.
4. To introduce the methodological instruments and research methods for analysing basic economic phenomena.
5. To develop a capability of using the economic knowledge in practice.

Competencies

• capability to use macroeconomic analysis terminology and to solve basic macroeconomic problems;
• capability to understand social and economic processes;
• capability to use and assess macroeconomic data (GDP, inflation, unemployment);
• capability to understand and assess economic policy;
• capability to use microeconomic analysis terminology and to solve basic microeconomic problems;
• capability to identify the nature and behaviour of producers, consumers and investors;
• capability to understand managerial terms and processes of companies;
• capability to independently develop knowledge about the possibilities and limitations of economic theory, which is based on neoclassical synthesis, when explaining economic phenomena;
• capability to understand the main theories in the fields of microeconomics and macroeconomics;
• capability to solve different macro and microeconomic problems based on quantitative and qualitative information.

Learning outcomes
After passing the course, the student should be able to:

• use a basic knowledge of macroeconomic analysis;
• understand aggregate supply and demand, GDP, consumption, investment, export and import, money demand and supply;
• understand basis of macroeconomic equilibrium, inflation, unemployment, economic policy and economic growth;
• use a basic knowledge of microeconomic analysis;
• understand the consumer behaviour, the law of supply, the law of demand and the laws of market mechanism;
• understand production theory, cost theory and basis of perfect competition;
• use analytical skills to reach valid conclusions.

Syllabus
I. Macroeconomics

• 10 Principles of macroeconomics
• Macroeconomics as science
  • Subject and tools of macroeconomic research
  • Concepts of macroeconomic analysis
• Data in macroeconomics
  • GDP
  • CPI
  • Unemployment
• Gross Domestic Product
  • Factors of GDP
  • Factor prices
  • Distribution of income
  • Factors of demand and supply for goods and services
  • Equilibrium on market for goods
• Money and inflation
  • Long run theory of inflation (flexible prices, market clearing)
• Small open economy
  • Net export
  • Net export of capital
  • National income identity
  • Economic policy and net export
  • Factors of exchange rate
• Unemployment
  • Natural rate of unemployment
  • frictional unemployment
  • Structural unemployment

II. Microeconomics

1. Introduction to microeconomics:

• basic economic problem
• positive economics and normative economics
• the production possibility frontier and the price line
• consumer behaviour, utility and indifference curve
• optimal consumption combination

2. Demand, supply and market equilibrium:

• the individual demand curve, the individual supply curve and the equilibrium
• the market demand curve, the market supply curve and the equilibrium
• the law of supply and demand
• elasticity of demand and supply
• government interventions: fixing prices
• consumer surplus and producer surplus
• economic efficiency in perfectly competitive markets

3. Production theory:

• the production function and the technical efficiency
• fixed factors and variable factors of production
• production in the short run: total product, average product and marginal product, law of diminishing marginal returns, output-elasticity
• production in the long run: concept of an isoquant, returns to scale

4. Cost theory:

• different concepts of cost
• costs in the short run: total cost, average cost and marginal cost, relationship between the cost functions and the product functions
• costs in the long run: concept of isocost and optimal production, average cost and marginal cost in the long run, concept of economies of scale
• optimal (least cost) combination of production factors

Types of learning/teaching

• frontal type of teaching
• independent work and individual study of students

 Methods of learning/teaching:

• explanation
• discussion
• case studies
• solving exercises
• including guest experts from companies in the teaching

Evaluation system and criteria
The assessment consists of three elements: 1) seminar work; 2) partial exam in Macroeconomics and 3) Partial exam on Microeconomics. Each partial exam has a weight of 50 % in respect to the final grade. Seminar work is a part of a partial grade at Macroeconomics. To obtain a positive finale grade (to pass the exam), each partial exam itself must be passed. To pass an exam, minimum of 50 % of all points is required.
 
Teaching and learning material

• Prašnikar, Janez, Domadenik, Polona in Koman, Matjaž. 2015. Mikroekonomija. Ljubljana: Ekonomska fakulteta Ljubljana, Založništvo.
• Mankiw, Gregory N. 2007. Macroeconomics. Worth Publishers.
• handouts of power point presentations, additional exercises and other additional study material provided via faculty intranet

Office hours

• before and after the class
• by appointment