Question

The term “disguised unemployment” generally means:

• A. Unlimited demand of labour in the subsistence sector
• B. Marginal product of labour is almost zero
• C. Informal economy of the urban sector harbours the bulk of unemployed labour in transition
• D. Seasonal unemployment

Hint:

Remember the differences:
• Disguised Unemployment $\rightarrow$ More workers than required; marginal productivity is nearly zero.
• Seasonal Unemployment $\rightarrow$ Employment available only during certain seasons.
• Open Unemployment $\rightarrow$ Workers are willing to work but cannot find jobs.
• Underemployment $\rightarrow$ Workers are employed below their skill level or for fewer hours than desired. A simple memory aid: \[ \boxed{ \text{Disguised Unemployment} = \text{Extra Labour + Zero Marginal Product} } \]

Answer 1

The Correct Option is B

Concept: Disguised Unemployment is a situation in which more workers are employed than are actually required to produce a given level of output. If some of these workers are withdrawn, the total production remains unchanged because their contribution to output is negligible or zero. This type of unemployment is commonly found in the agricultural sector of developing countries.

Step 1: Understand the meaning of Disguised Unemployment. Suppose a farm requires only 5 workers to cultivate the land efficiently, but 8 workers are employed. If 3 workers leave the farm and agricultural output remains unchanged, those 3 workers are said to be disguisedly unemployed. Thus, \[ \boxed{ \text{Marginal Product of the surplus labour is nearly zero.} } \]

Step 2: Examine the given options.
• [(A)] Unlimited demand for labour in the subsistence sector is not the meaning of disguised unemployment.
• [(B)] In disguised unemployment, the marginal product of labour is almost zero. This correctly defines the concept.
• [(C)] The informal urban economy may absorb unemployed workers, but this does not define disguised unemployment.
• [(D)] Seasonal unemployment occurs only during certain seasons of the year and is different from disguised unemployment. Hence, \[ \boxed{ \text{Disguised unemployment exists when the marginal product of labour is almost zero.} } \] Therefore, \[ \boxed{(B)\;\text{Marginal product of labour is almost zero}} \]