Assume that the inverse demand functions in two markets that a discriminating monopolist faces for its product are given by p1 = f (q1) = 100 − 2q1 and p2 = g(q2) = 60−2q2, where p1, p2, q1, and q2 denote the price charged in market one, the price charged in market two, the quantity demanded in market one, and the quantity demanded in market two, respectively. Also assume that the total cost (C) of the monopolist in supplying the good in the two markets is given by C = h(q1,q2) = 10 + 20q1 + 20q2. Find the levels of q1 and q2 that should be supplied to the two markets so that the combined profit of the monopolist will be maximized. Assume that the prices are in dollars.
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