The firm wears two hats remember, one as a buyer of
labor and one as a seller of products. If the firm sells its product
in a perfectly competitive product market, then its marginal
revenue, MR, is equal to product price, P, and is constant regardless
the level of Q. So MRPL = P · MPL.
Because MPL is downward sloping, multiplying by a positive
constant simply alters its height, but preserves its shape.
If the firm has market power in setting its
price, then MR < P, and MR diminishes as Q increases. Multiplying
two data series both of which diminish as Q increases simple means
that the result, MRPL, will diminish even faster as Q
Thus, the MRPL faced by a firm takes price
as given is more elastic than the MRPL faced by a firm
that sets price, but MRPL is downward sloping in both