Productivity is output per unit of input employed. In the theory of production, output per unit of variable input is called:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Average product
Productivity is output per unit of input. In the theory of production, output per unit of the variable input is the average product.
Option (1) Marginal product — Incorrect. It is the change in output from one more unit of the variable input.
Option (2) Total product — Incorrect. It is the whole output at each level of the variable input.
Option (3) Returns to scale — Incorrect. This is about what happens to output when all inputs change in the same proportion.
Option (4) Average product — Correct. Total product divided by the units of the variable input.
This question uses Human Capital Formation in India and Production and Costs together.
NCERT (2026-27): Indian Economic Development, Glossary: “Productivity – Output per unit of input employed. Increase in the efficiency on the part of capital or labour leads to increase in productivity. This term is generally used to refer to productivity increase in labour inputs.” Introductory Microeconomics, Production and Costs: “Suppose we vary a single input and keep all other inputs constant. Then for different levels of that input, we get different levels of output. This relationship between the variable input and output, keeping all other inputs constant, is often referred to as Total Product (TP) of the variable input. … Average product is defined as the output per unit of variable input. …” |