Chapter 12, Problem 4MCQ

To determine

The question requires us to determine the unemployment rate.

Explanation of Solution

Given,

Labor force = 100,000 workers

Part time workers = 20,000

Full time workers = 70,000

  $\begin{array}{c}\text{Number of employed people = Number of part-time workers + Number of full-time workers}\\ \text{Number}\text{of}\text{employed}\text{people = 20,000 + 70,000}\\ \text{= 90,000}\end{array}$

  $\text{Labor force = Number of employed people + Number of unemployed people}$

Rearrange the equation, and insert the values:

  $\begin{array}{c}\text{Number of unemployed people = Labor force – Number of employed people}\\ \text{Number}\text{of}\text{unemployed}\text{people = }100,000-90,000\\ \text{= }10,000\end{array}$

Number of unemployed workers = 10,000.

Insert the values in the formula for the unemployment rate:

  $\begin{array}{c}\text{Unemployment}\text{rate =}\frac{\text{Number}\text{of}\text{unemployed}\text{people}}{\text{Labor}\text{force}}\text{×100}\\ =\frac{10,000}{100,000}\times 100\\ =10\end{array}$

The unemployment rate is 10 percent.

Thus, option “d” is correct.

Economics Concept Introduction

People are considered unemployed if they are not working currently but actively looking for a job. The unemployment rate is the ratio of the number of unemployed people to the labor force in an economy.

  $\text{Unemployment}\text{rate = }\frac{\text{Number}\text{of}\text{unemployed}\text{people}}{\text{Labor}\text{force}}\text{×100}$

Where the labor force is the sum of employed and unemployed people in an economy.