The concept of capital output ratio expresses the relationship between the value of capital invested and the value of output. Capital output ratio is the amount of capital needed to produce one unit of output. … Here, a Rs 32 investmentproduces an output of Rs 8. Capital output ratio is 32/8 or 4.Output in economics is the “quantity of goods or services produced in a given time period, by a firm, industry, or country”, whether consumed or used for further production. The concept of national output is essential in the field of macroeconomics.
Capital refers to the material objects necessary for production. … Labor refers to the human work that goes into production. Typically economists assume that labor is a variable factor of production. The marginal product of an input is the amount ofoutput that is gained by using one additional unit of that input.
The Incremental Capital–Output Ratio (ICOR), is the ratio of investment to growth which is equal to 1 divided by the marginal product of capital. The higher the ICOR, the lower the productivity of capital or the marginal efficiency of capital