The condition for consistency of production and consumption specifies that the marginal rate of substitution of good 1 for good 2 equals the

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The condition for consistency of production and consumption specifies that the marginal rate of substitution of good 1 for good 2 equals the marginal rate of transformation of the two goods. This ensures that the rate at which a consumer is willing to substitute one good for another (marginal rate of substitution) matches the rate at which one good can be transformed into another in production (marginal rate of transformation), leading to an efficient allocation of resources.

The Condition for Consistency of Production and Consumption Specifies That