The condition for consistency of production and consumption states that, for any mix of outputs produced, the marginal rate of transformation of those goods in production must equal the marginal rates of substitution for all consumers using those goods.

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This is the basic condition for a production and consumption equilibrium. It requires that the rate at which one good can be transformed into another in production is equal to the rate at which consumers are willing to trade one good for another in consumption.

The Condition for Consistency of Production and Consumption States That