| Summary: | A commentary on Steven R. Beckman and W. James Smith's “Positively Sloping Marginal Revenue, CES Utility and Subsistence Requirements,” which appeared in Southern Economic Journal, October 1993, pp. 297-303. In contrast to Beckman and Smith's derivation of the marginal revenue function from the inverse demand function, the properties of the marginal revenue function that correspond to the Marshallian demand function are examined. It is assumed that goods and price vectors are nonnegative and that each of the goods has a nonnegative minimum subsistence requirement. It is shown that the marginal revenue function is non-monotonic: Marginal revenue is at first negative and then increases to a positive value; once positive, marginal revenue rises further, and the marginal revenue function is sloped positively; and eventually, marginal revenue starts to decline, and the marginal revenue function becomes negatively sloped. This shows that Beckman and Smith's results based on the inverse demand function are also valid when marginal revenue is derived from the Marshallian demand function.
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