Correct Answer: Are working less than their full capacity or in jobs below their skill level

Solution : The correct answer is (b) Are working less than their full capacity or in jobs below their skill level

The term "underemployment" refers to a situation where individuals are working less than their full capacity or are employed in jobs that are below their skill level or qualifications. Underemployment occurs when individuals have the desire and availability to work more hours or in better-quality jobs but are unable to do so.

Underemployment is often considered a form of labor market inefficiency because it signifies a mismatch between the skills and qualifications of individuals and the available job opportunities. It can result in lower productivity, reduced income levels, and dissatisfaction among workers.

It's important to note that underemployment is distinct from unemployment, which refers to individuals who are actively seeking work but are unable to find suitable employment. Underemployment refers to individuals who are already employed but are not fully utilizing their skills or working to their full potential.