In a competitive output market,people consume to the point where their marginal rate of substitution is equal to the price ratio. Producers choose outputs so that the marginal rate of transformation is equal to the price ratio.Because the MRSFc Equals the MRTFc,the competitive output market is efficient. Any other price ratio will lead to an excess demand for one good and an excess supply of the other. In a competitive output market, people consume to the point where their marginal rate of substitution is equal to the price ratio. Producers choose outputs so that the marginal rate of transformation is equal to the price ratio. Because the MRSFC Equals the MRTFC, the competitive output market is efficient. Any other price ratio will lead to an excess demand for one good and an excess supply of the other