In a competitive general equilibrium, MRSX,Y = MRTX,Y.

Question

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In a competitive general equilibrium, individuals will adjust their consumption of two goods such that their marginal rate of substitution (MRS) equals the market rate of trade (MRT). Therefore, MRSX,Y = MRTX,Y holds true in this situation. In a competitive general equilibrium, the marginal rate of substitution (MRS) of two goods X and Y must be equal to the marginal rate of transformation (MRT) of X and Y, which is represented by MRTX,Y. Therefore, MRSX,Y = MRTX,Y in a competitive general equilibrium.

In a Competitive General Equilibrium, MRSX,Y = MRTX,Y