2. (10 points total) Mark and Josh are both aged 63 but live in Canada and the U.S., respectively. Both have claimed government retirement benefits (CPP benefits for Mark and Social Security benefits for Josh). Note that one can receive retirement benefits but still choose to work. Suppose the retirement benefit at age 63 for both individuals is b=125. Assume that both face an hourly wage rate of w=10 and they have 7=50 hours of time endowment. Assume that both do not have other sources of non-labor income. a) (2 points) Under the CPP, retirement benefits are not reduced by earnings. In this case, write down Mark's budget constraint. Graphically illustrate Mark's budget constraint. b) (2 points) The Social Security program has an earnings test where retirement benefits are reduced by $1 for each $2 earned above the amount e=100. In this case, write down Josh's budget constraint. Graphically illustrate Josh's budget constraint. Suppose both Mark and Josh have the same preference over consumption and leisure such that their utility function is specified as U(c, l) = cl. c) (6 points) Compute the optimal consumption and leisure bundle for Mark and Josh, respectively. Graphically illustrate how the optimal consumption and leisure bundle is determined for Mark and Josh, respectively. Briefly describe how Josh and Mark's consumption and working hours are different