Which of the following is a condition for efficiency in the output market? A) MRT = MP_L/MP_K B) The marginal rate of substitution is the same for all customers. C) The marginal rate of technical substitution must be the same for all producers. D) The marginal rate of transformation must equal the marginal rate of substitution.

Question

Quizplus · Accepted Answer

Efficiency in the output market occurs when the marginal rate of transformation (MRT) equals the marginal rate of substitution (MRS), meaning that the rate at which one good can be transformed into another must equal the rate at which consumers are willing to substitute one good for another. This ensures that resources are being allocated in the most efficient way possible.

Which of the Following Is a Condition for Efficiency in the Output