4. Be able to define and know the importance to Public Economics of the following terms with respect to the Pareto Optimal General Equilibrium Model. contract curve marginal rate of transformation (MRT) marginal rate of substitution between two goods, X and Y (MRS) consumer surplus producer surplus Edgeworth Box First Fundamental Theorem of Welfare Economics Second Fundamental Theorem of Welfare Economics market failure with respect to a Pareto Optimum public goods merit goods production possibilities curve (in two space) utility possibilities curve (in two space) social welfare function the definition of a Pareto Optimal point in the Edgeworth Box 5. If you were to examine where the USA might be on its Utility Possibilities Curve, which, say, shows a trade-off in Utility between the Rich and the Poor sections of society (in terms of what each sector consumes), where do you think we would lie on the curve? Given your opinion, who do you think placed us where we are on the curve? The government? Certain people? Luck? Are you content with where you have placed us? Assuming that our markets are reasonably efficient; could you draw an Edgeworth Box that shows where you think the two classes of consumers lie