Final answer:
The budget constraint, also known as the opportunity set, is a model used by economists to demonstrate individual choice under scarcity. It shows all the consumption choices available given an individual's budget and the relative prices of goods. Choices outside of the budget constraint are unaffordable.
Step-by-step explanation:
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the opportunity set. The budget constraint represents the frontier of the opportunity set and shows the various combinations of goods and services that a consumer can afford with a fixed budget, given the prices of those goods and services. It is a diagram which illustrates what choices are possible and the limits of an individual's purchasing power. This constraint shows that every choice has an opportunity cost, implying that choosing more of one good comes at the expense of less of another due to limited resources.
Furthermore, the relative price of the goods determines the slope of the budget constraint, showing how many units of one good must be forgone to acquire one more unit of another good. Choices that lie beyond someone's budget constraint are not affordable and therefore not feasible within their opportunity set. In more advanced economic models, multiple budget constraints can be used to illustrate the tradeoffs between many different pairs of goods, rather than just two.