Consider the following statements regarding ‘Disguised Unemployment’: 1. It refers to a situation where people are willing to work but cannot find jobs. 2. It is most commonly observed in the agricultural sector in rural areas. 3. Even if some workers are withdrawn, the total production does not fall. Which of the statements given above is/are correct?

The correct option is 2 and 3 only. Explanation Disguised unemployment is a specific type of unemployment where more individuals are employed in an activity than are actually required for its execution. It is characterized by a situation where the marginal productivity of labor is zero. Statement-wise Analysis: - Statement 1 is Incorrect. The situation described-where people are able and willing to work at the prevailing wage rate but cannot find work-is the definition of Open Unemployment. In disguised unemployment, individuals appear to be employed, but they are not fully utilized. - Statement 2 is Correct. Disguised unemployment is most prevalent in the agricultural sector of developing economies. Due to joint family systems and a lack of alternative employment opportunities, surplus family members often work on the same plot of land, resulting in overcrowding. - Statement 3 is Correct. A core characteristic of disguised unemployment is that the contribution of the extra workers to the total output is nil. Therefore, if these surplus workers are withdrawn, the total production does not fall. Key Takeaway: Disguised unemployment exists when the marginal physical productivity of labor is zero, meaning the removal of surplus labor does not reduce aggregate output.

NCERT Class 11 Economics — Chapter 7: Employment: Growth, Informalisation and Other Issues

mcqmedium

Consider the following statements regarding ‘Disguised Unemployment’:

It refers to a situation where people are willing to work but cannot find jobs.
It is most commonly observed in the agricultural sector in rural areas.
Even if some workers are withdrawn, the total production does not fall.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A2 and 3 only
B1, 2 and 3
C1 and 2 only
D2 only

Did you get this right?

Solution

The correct option is 2 and 3 only.

Explanation

Disguised unemployment is a specific type of unemployment where more individuals are employed in an activity than are actually required for its execution. It is characterized by a situation where the marginal productivity of labor is zero.

Statement-wise Analysis:

Statement 1 is Incorrect. The situation described-where people are able and willing to work at the prevailing wage rate but cannot find work-is the definition of Open Unemployment. In disguised unemployment, individuals appear to be employed, but they are not fully utilized.
Statement 2 is Correct. Disguised unemployment is most prevalent in the agricultural sector of developing economies. Due to joint family systems and a lack of alternative employment opportunities, surplus family members often work on the same plot of land, resulting in overcrowding.
Statement 3 is Correct. A core characteristic of disguised unemployment is that the contribution of the extra workers to the total output is nil. Therefore, if these surplus workers are withdrawn, the total production does not fall.

Key Takeaway:

Disguised unemployment exists when the marginal physical productivity of labor is zero, meaning the removal of surplus labor does not reduce aggregate output.

Your note

More from Chapter 7: Employment: Growth, Informalisation and Other Issues

With reference to the definition of ‘workers’ in the Indian economy, consider the following statements: 1. Self-employed individuals are considered workers in the Indian economy. 2. A person temporarily abstaining from work due to illness is excluded from the worker category. 3. Those who help main workers in economic activities without receiving direct payment are included in the category of workers. Which of the statements given above is/are correct?

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Consider the following statements regarding the ‘Worker-Population Ratio’ in India: 1. It is defined as the total population divided by the number of workers. 2. The worker-population ratio is generally higher in rural areas compared to urban areas. 3. A higher ratio indicates that a greater proportion of the population is actively contributing to the production of goods and services. Which of the statements given above is/are correct?

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With reference to the concepts of Gross Domestic Product (GDP) and Gross National Product (GNP), consider the following statements: 1. GNP is calculated by deducting the value of exports from the GDP. 2. GDP is the total money value of all final goods and services produced in a country in a year. 3. The net earning from foreign transactions is always positive for a developing country like India. Which of the statements given above is/are correct?

easy

Consider the following statements regarding the participation of women in the workforce in India: 1. Women constitute the majority of the workforce in rural India. 2. The worker-population ratio for women is significantly higher in urban areas than in rural areas. 3. Many household activities performed by women are not recognised as productive work, leading to an underestimation of women workers. Which of the statements given above is/are correct?

medium

The term "Squatters" in the context of the informal sector refers to:

easy

Keep practising Chapter 7: Employment: Growth, Informalisation and Other Issues

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The correct option is 2 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 is Incorrect. The situation described-where people are able and willing to work at the prevailing wage rate but cannot find work-is the definition of Open Unemployment. In disguised unemployment, individuals appear to be employed, but they are not fully utilized.
Statement 2 is Correct. Disguised unemployment is most prevalent in the agricultural sector of developing economies. Due to joint family systems and a lack of alternative employment opportunities, surplus family members often work on the same plot of land, resulting in overcrowding.
Statement 3 is Correct. A core characteristic of disguised unemployment is that the contribution of the extra workers to the total output is nil. Therefore, if these surplus workers are withdrawn, the total production does not fall.

Key Takeaway:

Disguised unemployment exists when the marginal physical productivity of labor is zero, meaning the removal of surplus labor does not reduce aggregate output.