The diagram below shows a situation with the 100 percent retirement test (Refer to Figure 4.3(b)...

 

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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 T 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 low-wage worker (black budget line) and Binna is a high-wage 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., ceteris paribus, who is more likely to retire, the high-earners or the low-wage workers? (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 T 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 low-wage worker (black budget line) and Binna is a high-wage 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., ceteris paribus, who is more likely to retire, the high-earners or the low-wage workers? (2)