(Answered) According to the baumol-tobinnbspmodel of cash management

Economics

According to the Baumol-Tobin model of cash management the combined opportunity and transaction cost of holding currency is C= FN + i Y/2N

Differentiate C with regards to N
Find the 1st order condition for the optimal value of N, that is N*
Check the 2nd order condition to confirm that total costs are minimized at N*

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