Suppose MRS does not equal MRT for all consumers. In this case, the economic outcome is not fully efficient because:
A) exchange is inefficient.
B) the use of inputs in production is inefficient.
C) the mix of outputs in inefficient.
D) none of the above

Question

Quizplus · Accepted Answer

When MRS (Marginal Rate of Substitution) does not equal MRT (Marginal Rate of Transformation), it indicates that the mix of outputs is inefficient, as resources are not being allocated to produce the optimal combination of goods that consumers prefer.

Suppose MRS Does Not Equal MRT for All Consumers