Question

What is a difference between unemployment and other underused resources, such as unburnt fuel or an idle factory? Select one: a. Unemployment represents foregone production in the economy. b. The productive potential of labor unused today is lost forever. c. Unspent fuel and idle plants lose some of their productivity capacity when they lie fallow while unused labor does not. d. The providers of labor do not notice the reduction in demand for their good or service. e. All of these answers are differences between unemployment and other underused resources.

Answer 1

Answer:

B) The productive potential of labor unused today is lost forever.

Explanation:

The greatest difference between labor and the other factors of production is that labor is extremely perishable. In other words, if you do not work one day, that lost labor cannot be recovered. Labor is similar to services in a way that they cannot be stored or accumulated, nor they can be postponed. But that doesn't mean that all unemployment is negative. Cyclical unemployment is always negative, but if the unemployment rate is below the natural rate, then it means that the economy is overheated. A low unemployment rate is always healthy, e.g. 3.5-4.5%.

Other factors of production can be accumulated, e.g. you can store fuel.