In the Baumol-Tobin model, given that total costs for an individual equals 
+ 
, where T0 = monthly income, b = brokerage costs, and C = amount raised from each bond transaction, derive the so-called square root rule.
Definitions:
Specialization
The process of focusing effort and resources on a particular area of expertise or production to increase efficiency and output.
Barter System
An economic system where goods and services are directly exchanged for other goods and services without the use of money.
Monetary Exchange
The process of trading goods and services using money as a medium of exchange rather than direct barter.
Double Coincidence
A situation in a barter system where two parties each have something the other wants, allowing for an exchange without the need for money.
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