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2. The diagram below shows a situation with the 100 percent retirement test (Refer to Figure 4.3(b) in the textbook if you want to refresh
2. The diagram below shows a situation with the 100 percent retirement test (Refer to Figure 4.3(b) in the textbook if you want to refresh your memory about it). The retirement income (pension) would be Yb. YA Yb . In this same diagram, draw the third budget line that has the slope equal to the reservation wage for the worker represented by the orange indifference curve. (2) b. Explain in words how you have drawn the budget line in part (a) above. (2)
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