Civil Services Prep

Prelims 2013 · Economy · Question 17

Disguised unemployment generally means

  1. Large number of people remain unemployed
  2. Alternative employment is not available
  3. Marginal productivity of labour is zero
  4. Productivity of workers is low

Answer

Marginal productivity of labour is zero

  • (a) Mere large-scale unemployment refers to open unemployment, not disguised unemployment. Verdict: Incorrect.
  • (b) Lack of alternative jobs may coexist, but it does not define disguised unemployment. Verdict: Incorrect.
  • (c) In disguised unemployment, some workers can be withdrawn without reducing total output; hence their marginal productivity is zero. Verdict: Correct.
  • (d) Low productivity is broader underemployment, not the precise meaning of disguised unemployment. Verdict: Incorrect.
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