Unemployment can exist in a market clearing model, if:
A)all workers are identical.
B)it takes some search time for workers to find jobs.
C)the labour supply curve is upward sloping.
D)all of the above.

Question

Quizplus · Accepted Answer

If it takes some search time for workers to find jobs, then there may be a temporary mismatch between the demand for workers and the supply of workers, leading to unemployment. Even if all workers are identical and the labour supply curve is upward sloping, unemployment can still exist because of the frictional aspect of job search.

Unemployment Can Exist in a Market Clearing Model, If