Jurgen Klopp's men are currently seven points behind United, who are yet to lose a game all season.
And Murphy says United's early success has earned them the right to lose one game, where as Liverpool cant afford the same luxury.
"I personally think with the way the table is, irrespective of who United have or haven't played, it's a bigger game for Liverpool," the ex-midfielder said on The Debate.
"United have already earned the right to have a slip up. When you're unbeaten for that many games and they have hardly put in a bad performance, they would be forgiven one. It would be hugely disappointing but they would have the points on the board, but for Liverpool to lose to United, all of a sudden, that gap and the question marks get bigger.
"Yes [their title ambitions would be over if they lost]. I don't think Liverpool have a good enough squad to win it anyway. I don't like to say that, but I think it's true.
"It's a big, big game for Liverpool, especially after the Man City game. I know they went down to ten men but to lose 5-0 was bad.
"I think they need to put a marker in the sand again. Last season they did it and beat everybody, all the big boys, and this one would send a message that they are still in it, they're still fighting and they've got the quality. It might be a lucky win, but they won't care."