The government typically collects redistribution income through distortionary taxation.

Consider now the problem when the government taxes two productive people, not in order to redistribute but to collect taxes that are used for government spending. There are two people in the economy1 each productive. Person 1 produces Y1(T) = 1 (111' while person 2 produces Y2 (T) = 1 (127-. Parameters a1 and (12 are both in the interval [0.5, 1]. Question 3.2 [5 points] If the government sets a tax '1' E [0,1], what is the tax revenue that it collects from agent 1'? From agent 2? What is the total tax revenue? I Question 3.3 fl 0 points} What is the tax rate 1'* that maximizes the total tax revenue that the government can collect? Question 3.4 [.5 points] If the government currently sets a tax rate 1' > a", what would your policy recommendation he? Question 3.5 [5 points] Imagine you are person 1 and you do not like being taxed. If this is the case, would you like to live in an economy where person 2 has a high parameter 412 or a low parameter a2. Explain why