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UPSC Prelims 2013 Q67: Indian Economy – Human Development, Poverty & Employment Schemes

UPSC Prelims 2013, General Studies Paper I · Indian Economy

Disguised unemployment generally means
  1. (a) large number of people remain unemployed
  2. (b) alternative employment is not available
  3. (c) marginal productivity of labour is zero
  4. (d) productivity of workers is low

Answer: (c) marginal productivity of labour is zero

Explanation

Disguised unemployment

In disguised unemployment, more people work on a job than are needed.

If some are removed, output does not fall.

So the marginal productivity of labour is zero.

OptionVerdictReason
(a) Large number of people remain unemployedIncorrectThey appear employed
(b) Alternative employment is not availableIncorrectA cause, not the meaning
(c) Marginal productivity of labour is zeroCorrectThe textbook definition
(d) Productivity of workers is lowIncorrectLow is not the same as zero at the margin

Example: a farm needs three workers, but five family members work on it; the extra two add nothing.

Types of unemployment:

TypeMeaning
DisguisedCommon in Indian agriculture
SeasonalWork only in part of the year
StructuralSkills do not match the jobs
FrictionalShort gap between jobs
CyclicalDue to a slump in business

Answer: (c) marginal productivity of labour is zero.

Why each option is right or wrong

Key point

Disguised unemployment: surplus workers whose removal does not reduce output (marginal product zero); typical of Indian agriculture.

Remember

Disguised unemployment = zero marginal productivity.

Common mistakes

Exam tip

Take the extra worker away; if output stays the same, he was disguisedly unemployed.

Sources

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