CA Foundation · Business Economics · Indian Economy
Which of the following types of unemployment is most characteristic of the agricultural sector in India, where several family members work on a small plot though the output would remain the same if some of them left?
The correct answer is disguised unemployment. In Indian agriculture, surplus family members work on small plots although their marginal productivity is zero, so output would not fall if they left. Frictional and cyclical unemployment arise from job transitions and business downturns, which does not describe this situation.
- AFrictional unemployment
- BDisguised unemploymentCorrect
- CCyclical unemployment
- DStructural unemployment caused by technological change
Explanation
Disguised unemployment occurs when more workers are engaged in a job than are needed, so the marginal productivity of the surplus workers is zero. This is typical of Indian agriculture with small family holdings. Frictional unemployment relates to people temporarily between jobs, and cyclical unemployment arises from a downturn in the business cycle, so neither fits.
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