1 (10 points) There are two only occupations in this country; you can either work as a laborer or you can become an entrepreneur, who employs labor and makes profits. You need a loan of $20,000 to become an entrepreneur. With $20,000 you can set up a factory that hires 10 workers, to each of whom you must pay annual wages equal to $2,000. The combined effort of all the workers produces an output of $30,000 in the factory. At the end of the year, you must sell your factory for $20,000 and repay the loan. The rate of interest is 10% per year. If you are caught after defaulting on your loan, you will be fined $5,000 and 20% of your business profits would be seized. You will also lose whatever collateral you had put up with the bank (plus interest), but you would get to keep the $20,000 (plus interest that you owe). Find out how much collateral the bank should ask for before it would allocate a loan to you.