For a profit-maximizing competitive firm, its marginal revenue product curve is its labor demand curve.

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In a perfectly competitive market, a firm is a price taker, meaning it cannot influence the price of its product. Therefore, the marginal revenue product (MRP) curve, which shows how much additional revenue a firm will receive from hiring one more unit of labor, is also the firm's labor demand curve. The profit-maximizing firm will hire labor up to the point where the MRP equals the wage rate, as hiring any more labor would mean that the additional revenue generated is less than the cost of the additional labor.

For a Profit-Maximizing Competitive Firm, Its Marginal Revenue Product Curve