How is output/production measured in tertiary sector?

indirectly in terms of wages and salaries

The correct answer is Option 1: indirectly in terms of wages and salaries

In the tertiary sector, services are produced rather than physical goods. Since services are intangible and cannot be measured directly like manufactured goods, their output is generally measured indirectly through the income earned by service providers, such as wages and salaries.

NCERT: "Tertiary activities include both production and exchange. The production involves the ‘provision’ of services that are ‘consumed’. The output is indirectly measured in terms of wages and salaries. Exchange, involves trade, transport and communication facilities that areused to overcome distance. Tertiary activities, therefore, involve the commercial output of  services rather than the production of tangible goods. They are not directly involved in the processing of physical raw materials. Common examples are the work of a plumber, electrician, technician, launderer, barber, shopkeeper, driver, cashier, teacher, doctor, lawyer and publisher etc. The main difference between secondary activities and tertiary activities is that the expertise provided by services relies more heavily on specialised skills, experience and knowledge of the workers rather than on the production techniques, machinery and factory processes.".