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the total value of total compensation must sum to (1 − 0.3)600 = 420. In the graph below, the line marked (a) shows the employee’s budget constrain in this case. (b) Suppose that wages remain taxable but health insurance is now a tax preferred fringe beneﬁt. Graph the new budget constraint. See full list on xplaind.com Budget constraints are easy to understand if you apply a little math. Step 1: The equation for any budget constraint is: Budget = (P 1 × Q 1) + (P 2 × Q 2) where P and Q are the price and quantity of items purchased (which we assume here to be two items) and Budget is the amount of income one has to spend. Step 2. Apply the budget constraint ... Which of the following causes the budget constraint to make a non-parallel shift inward? A choice that would result in income left over An optimal choice A choice on the budget constraint An impossible choice given the income 1.33 0.50-0.67-0.33 The indifference curve shifts to the right.