Structural unemployment refers to a type of unemployment that occurs due to a mismatch between the skills and qualifications of workers and the requirements of available jobs. This type of unemployment is often long-term and can be difficult to overcome. The correct answer to the question is option 'D', which states that inadequate production capacity is the cause of structural unemployment.

Explanation:

Inadequate production capacity means that the economy is not able to produce enough goods and services to meet the demand. This can happen due to various reasons such as lack of investment in infrastructure, limited access to capital, or insufficient technology. When there is inadequate production capacity, businesses are not able to expand and create new jobs, leading to a shortage of employment opportunities.

Factors contributing to inadequate production capacity:

1. Lack of investment: If there is limited investment in the economy, businesses cannot expand and create new jobs. This leads to a shortage of employment opportunities, which results in structural unemployment.

2. Inefficient production processes: Inefficient production processes can lead to higher costs and lower productivity. This makes it difficult for businesses to remain competitive in the market, leading to a reduction in the number of jobs available.

3. Lack of innovation: If businesses do not invest in new technology and innovation, they are not able to produce goods and services efficiently. This results in a reduction in the number of jobs available, leading to structural unemployment.

4. Lack of skilled workers: If there is a shortage of workers with the necessary skills and qualifications, businesses are not able to expand and create new jobs. This leads to a shortage of employment opportunities, which results in structural unemployment.

Conclusion:

Structural unemployment is a complex issue that requires a multi-faceted approach to solve. Inadequate production capacity is one of the factors that contribute to structural unemployment. It is important for policymakers to address this issue by investing in infrastructure, promoting innovation, and ensuring that workers have the necessary skills and qualifications to meet the demands of the job market.