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Q. 21st century insurance offers mail-order auto mobile insurance to preferred risk drivers in the Los Angeles area. The company is the low-cost provider of insurance in this marketplace but doesn't believe its $750 yrly premium can be raised for competitive reasons. Its rates are expected to remain stable during coming periods; hence, p = mr = $750. Total also marginal cost relations for the company are as follows: tc= $2,500,000 + $500q + $0.005q2, mc = @tc/@q = $500 + $0.01q. Compute the profit-maximizing activity level.
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