Chapter 11, Problem 1FT

To determine

Who among the given list of people can be categorized as “unemployed”?

Answer to Problem 1FT

A person out of work and actively searching for work

Explanation of Solution

A person can be categorized as unemployed only if he is out of work, but is willing, interested and able to work but cannot find a job. This also means that he is eagerly searching for a job. Such a person can be categorized as unemployed.

A person in prison cannot be categorized as unemployed as he would not be able to work, though he may be interested and willing.

A person who wants to work but stopped searching six months ago would not be categorized as an unemployed person but a “discouraged worker”, as he has stopped searching for a job.

A person who works part time, but who wants full-time work would not be categorized as “unemployed” but as “under-employed”.

Economics Concept Introduction

Concept introduction:

Unemployment: Unemployment refers to a situation where the workers are ready to offer their labor at the existing market wage rate and are actively searching for a job but fail to find a job. It is a situation where the market fails to absorb the whole labor force.

Discouraged workers: Discouraged workers are workers who have given up looking for work but who would still like a job.