Chapter 13, Problem 3MCQ

To determine

The question requires us to determine the type of unemployment caused by a mismatch between the demand and supply of workers in the labor market.

Explanation of Solution

Structural unemployment is the unemployment that results when workers available for work lack the skills required for the job, or when the number of people seeking jobs is more than the jobs available in the labor market at the given wage rate.

So, a worker who is unemployed because his/her skills are no longer required in the labor market is considered a structurally unemployed person.

So, option “b” is correct.

Other options are incorrect because:

a) Frictional unemployment reflects the unemployment that occurs during the time workers spend in a job search.

c) Unemployment that occurs due to fluctuations in the business cycle (recession or boom period) is considered cyclical unemployment.

d) The unemployment rate that occurs from the effects of structural unemployment and frictional unemployment is considered the natural rate of unemployment.

e) Full unemployment doesn’t say anything about the cause of unemployment.

Economics Concept Introduction

An individual is considered unemployed who is not working, but actively looking for a job.

Types of unemployment are:

• Structural unemployment,
• Frictional unemployment,
• Cyclical unemployment,
• Seasonal unemployment, and
• Disguised unemployment