Budget Constraint

The budget constraint represents what a consumer can buy. $$X p_X + Y p_Y \leq I$$

Example

Alice has $8 to buy chocolate (X) and strawberries (Y). So she can buy chocolate and strawberries, as long as she spends less than $8.

The price of a chocolate is $4. She finds strawberries for $2 each.

Her budget constraint is

$$4X + 2Y \leq 8$$

A tiny bit of algebra gives

$$Y \leq - 2X + 4$$

The budget constraint is the shaded area in the plot below

Question

Alice has $229 to buy chocolate (X) and strawberries (Y). The price of a chocolate is $33 and the price of a strawberry is $26.

Write Alice's budget constraint. Can he afford 3 chocolates and 3 strawberries at the same time?

Alice's budget constraint is

$$ 33 X + 26 Y \leq 229 $$

In total, 3 chocolates and 3 strawberris costs Alice

$$ 33 \times 3 + 26 \times 3 = 177 $$

Yes! Alice can offord 3 chocolate bars and 3 strawberries.