A4-02 (20 marks) In the previous question, assume now that both Air Canada and Westjet have the same cosnstant marginal cost of $147 per passenger. Furthermore, suppose Air Canada announces the quantity of passengers it plans to carry before WestJet does. Thus Air Canada is a Stackelberg-Leader and WestJet is the Stackelberg Follower. Determine the Stackelberg-Nash equilibrium quantities, price, and profits. A4-03 (15 marks) Consider the following simple duopoly game matrix, where each firm can choose either a large output (L) or a small output (S). Firm 2 S L Firm 1 col 500, 500 200, 700 L 700, 200 400. 400 a. If the two firms could enforce collusion, what strategy would they agree to play in a one- shot game? Is collusion a self-enforcing agreement? Explain why or why not. b. If the game is repeated exactly three times, what is the Nash equilibrium of the game? c. Suppose the game is repeated an infinite number of times and the payoff to each firm is the present value of the infinite sum of payoffs on the equilibrium path, where the interest rate is denoted by i. Determine the range of interest rates / that make the strategy combination (S, S) being played in every period an equilibrium to the infinitely repeated game, when the two firms play the Grim strategy of playing _ forever after the rival plays L