Official Answer Key & Detailed Solution
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Correct Answer: Option (C) — Marginal productivity of labour is zero
Concept & Option Breakdown
Standard Reference VerifiedDisguised unemployment is a phenomenon wherein more workers are engaged in an activity than are actually needed. In such a situation, even if a portion of the labor force is withdrawn, total output remains unchanged. Therefore, the marginal productivity of labour (the additional output produced by an additional unit of labour) is zero.
Definition-based concept: Disguised unemployment occurs when removing surplus labour causes zero reduction in total output, meaning Marginal Productivity = 0.
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