MICROECONOMICS

6 ECTS credits

School of Economics and Business
Dubrovnik International University

Economics is a social science that examines a set of questions that have to do with the production, distribution and consumption of the resources that are necessary to sustain life and otherwise enrich our lives. These questions include:

• Who decides what (and how much of it) will be produced in an economy?
• Once production is completed, how do we—as a society—decide who will get what?
• Why are some things very cheap while other things are very expensive?

These are questions that are sometimes taken for granted—we just assume, for example, that bread will be available to us every day. And when problems occur—oil becomes too expensive or factories close or wages are reduced—people complain that the “system” is unfair or that it doesn’t work. But in order to understand why things sometimes seem to go wrong, we must first understand how the system that we have often does work. And the system that we use is called the free-market system. So here’s another question: Under what circumstances should the government interfere with the operation of a free market?
The course will be presented in four sections:
Section 1 presents the core ideas in economics and the basic tools that are employed in order to carry out our investigation. It describes how the market system works and the advantages of that system.
Section 2 explains how scarce resources are allocated by the price system and how the allocation of resources can be changed through the introduction of restrictions on the operation of a free market and on a competitive system of prices.
Section 3 further explores the benefits of the operation of free markets and free trade and also explores some situations in which it might be necessary for society to forsake a competitive solution and instead seek to reach a collective decision regarding the allocation and production of resources.
Section 4 examines different types of market structure and the implications of market structure for the operation of the market and for the allocation of resources.
The course will aim to teach students to think in a disciplined manner about these and other topics.
There are no required courses in order to take this class.