Why scarcity leads to tradeoffs

1. Explain why scarcity leads to tradeoffs?

2. What are diminishing marginal returns?

3. Suppose Alphonso’s town raises the price of bus tickets from $0.50 to $1 and the price of burgers rises from $2 to $4.

Why is the opportunity cost of bus tickets unchanged?

Suppose Alphonso’s weekly spending money increases from $10 to $20. How is his budget constraint affected from all three changes? Explain.