= In this problem, we compare different tax policies and their effect on firms. Suppose that the government wants to finance some spending G 0.1 only through taxation of firms. Assume that the firm's production function is given by Y 2K 0.5 NO.5 with K=1 and real wage is given by w = 1. = a Suppose that the government imposes a tax rate t on the firm's revenue. Solve for the firm's labor demand as a function of t. Then find the value of t that balances the government's budget - makes government revenue from the tax equal to its expenditure G. Call this value t*. What is the value of labor demand at t*? b Now suppose that the government imposes a tax rate t on firm's profit. Solve for the firm's labor demand as a function of t. Then find the value of t that balances the government's budget - makes government revenue from the tax equal to its expenditure G. Call this value t. What is the value of labor demand at t*? c Compare your answers to parts 1 and 2 and explain the difference. If the government is concerned with total output in the economy, which tax system does better