The correct option is (c).
Explanation
Disguised unemployment is a situation where more individuals are engaged in a specific activity than are actually required. In economic terms, it is defined by a state where the marginal productivity of labor is zero.
Statement-wise Analysis:
- Statement 1 is Correct: In disguised unemployment, individuals appear to be employed because they are physically present and working. However, their contribution to the total output is nil. This means that the aggregate production does not increase with the addition of these workers.
- Statement 2 is Incorrect: Disguised unemployment is a characteristic feature of the agricultural sector in developing economies like India, often driven by the joint family system and a lack of alternative job opportunities in other sectors. It is not the primary form of unemployment in the urban industrial sector, which typically faces open, structural, or frictional unemployment.
- Statement 3 is Correct: Since the marginal productivity of the surplus workers is zero, their removal from the workforce does not affect the total volume of production. The output remains constant even if these extra workers are withdrawn.
Key Takeaway:
Disguised unemployment is predominantly found in the agricultural sector and is characterized by the fact that the marginal productivity of the additional labor force is zero.