If the product market is imperfectly competitive rather than perfectly competitive,the marginal revenue product curve declines faster.

Question

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In imperfectly competitive markets, firms have some degree of market power, which means they can influence the price of their product. As a result, the marginal revenue product (MRP) curve, which represents the additional revenue a firm earns by hiring one more unit of labor, declines faster than in a perfectly competitive market. This is because as the firm hires more workers and increases its output, it faces diminishing returns to labor and must lower the price of its product to sell more. This reduces the additional revenue it earns from hiring one more worker, causing the MRP curve to decline faster.

If the Product Market Is Imperfectly Competitive Rather Than Perfectly