Test Bank to pany Rosen ’s Public Finance, Seventh Edition Chapter 3 13 CHAPTER 3- Tools of Normative Analysis Multiple-Choice Questions 1. The slope of the production possibilities curve is the a) marginal rate of substitution. b) contract curve. c) offer curve. d) Engel curve. e) marginal rate of transformation. 2. The First Fundamental Theorem of Welfare Economics requires a) producers and consumers tobe price takers. b) that there bea market for modity. c) that the economy operate at some point on the utility possibility curve. d) allof the above. 3. Points outside the production possibility frontier are a) producible. b) endowment points. c) consumer equilibrium points. d) unattainable. 4. General equilibrium refers to a) examining markets without specific information. b) finding equilibrium from general information. c) pricing goods at their shadow price. d) allof the above. e)none of the above. 5. The marginal rate of substitution is a) the slope of the utility curve. b) the slope of the contract curve. c) the slope of the utility possibilities curve. d)none of the above. 6. Market failure can occur when a) monopoly power exists in the market. b) markets are missing. c) consumers can influence prices. d) allof the above. Test Bank to pany Rosen ’s Public Finance, Seventh Edition Chapter 3 14 7. Partial equilibrium is a) exactly like general equilibrium. b) studying only
