Which type of unemployment is characterized by a situation where more workers are engaged in an economic activity than are required, such that the marginal productivity of additional workers is virtually zero?
- Disguised unemploymentAnswer
- BStructural unemployment
- CFrictional unemployment
- DSeasonal unemployment
Answer
Disguised unemployment is characterized by a situation where more workers are engaged in an economic activity than required, causing the marginal productivity of additional workers to be zero.
Disguised unemployment refers to a state in which more people are employed than are actually needed to complete a task. In this scenario, the marginal productivity of an extra worker is zero because total production remains unchanged even if some workers are withdrawn.
Step-by-Step Solution
Key Concept
Disguised Unemployment and Marginal Productivity of Labor