Question 10 (all parts except (iv) one mark) A creditor has lent L to a developing country, which subsequently defaults and enters negotiations with the creditor. (i) Suppose a debtor puts in effort e between 0% and 100% and that e is the probability that a loan L can be repaid with produced output and that otherwise output is zero. What is the expected output produced by effort e. (ii) Suppose a creditor can choose to only receive RKL and leave L-R with the debtor. And also assume effort cost by the debtor is 2e? What is the expected payoff for the debtor? If the creditor adopts this forgiveness policy, what is their expected payoff? What is the optimal effort for the debtor if the creditor forgives by R