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l. 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
l. 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. Think about two identical workers, both represented by the orange indifference curve. They would receive the same pension and they both are deciding to retire or not_ The only difference is that Anna is a lowwage worker {black budget line) and Binna is a highwage worker (blue budget line}. a. In this same diagram, draw the highest indifference curve Anna would reach if she does not retire. (2) b. In this same diagram, draw the highest indifference curve Binna would reach if she does not retire. (2) c. What does your drawing tell you, i.e', ceterisparibus, who is more likely to retire, the highearners or the lowwage workers? (2)
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