Involuntary unemployment
A) occurs when the wage rate is below the equilibrium wage rate.
B) exists when there is an excess quantity of labor supplied.
C) will increase as the wage rate falls.
D) exists when there is a shortage of labor.

Question

Quizplus · Accepted Answer

Involuntary unemployment exists when there is an excess quantity of labor supplied but not enough demand to employ them all. This can occur due to various factors such as changes in technology, economic downturns, or structural changes in the industry. It is not directly related to the wage rate but rather to the lack of available employment opportunities. Choice A is incorrect as a wage rate below the equilibrium level would incentivize employers to hire more workers, resulting in more employment opportunities. Choice C is incorrect as involuntary unemployment would decrease as the wage rate falls since more employment opportunities would become available. Choice D is incorrect as a shortage of labor would result in a higher wage rate and would not lead to involuntary unemployment.

Involuntary Unemployment