Using the assumption of the labour market, if employment equals 20 000 people and output is 35 000, we can conclude that

A. there is no cyclical unemployment.

B. there is no frictional unemployment.

C. the economy has not reached equilibrium.

D. there is no structural unemployment.

The assumptions of the labour market are:

• Labour is the only input
• Wage is the only cost
• Majority of labour skills are identical
• Each unit of output is produced by one person
• Marginal costs and average costs are equal
• The amount produced depends on the amount that the firm is able to sell, which in turn depends on the price that it charges