Question

‘Mr. Rishi, after completing his education, has joined his family business but his marginal productivity is zero.'

Comment upon the employment status of Mr. Rishi. Give valid reasons in support of your answer. 

Answer 1

In the example given, Mr. Rishi is disguised unemployed.

Reasons:

1. Disguised unemployment occurs when the number of workers employed exceeds the number required. And in that particular scenario, Mr. Rishi is unnecessary as a worker.
2. His marginal productivity is zero, which means that whether he enters or leaves the business, there is no difference in overall output.
3. He appears to be working since joining his family firm, but his contribution is zero.