combination of all leisure and no income is not so attractive. The budget constraint framework suggests that

when people make choices in a world of scarcity, they will use marginal analysis and think about whether they

would prefer a little more or a little less.

A rational consumer would only purchase additional units of some product as long as the marginal utility

exceeds the opportunity cost. Suppose Alphonso moves down his budget constraint from Point A to Point B to

Point C and further. As he consumes more bus tickets, the marginal utility of bus tickets will diminish, while

the opportunity cost, that is, the marginal utility of foregone burgers, will increase. Eventually, the opportunity

cost will exceed the marginal utility of an additional bus ticket. If Alphonso is rational, he won’t purchase more

bus tickets once the marginal utility just equals the opportunity cost. While we can’t (yet) say exactly how many
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