What does 'r' in equation dN/dt = rN (K-N/K) represent?

Intrinsic rate of natural increase

The correct answer is Option (2) → Intrinsic rate of natural increase 

A population growing in a habitat with limited resources show initially a lag phase, followed by phases of acceleration and deceleration and finally an asymptote, when the population density reaches the carrying capacity. A plot of N in relation to time (t) results in a sigmoid curve. This type of population growth is called Verhulst-Pearl Logistic Growth and is described by the following equation:

dN/dt=rN(K−N/K)

 Where N = Population density at time t
r = Intrinsic rate of natural increase
K = Carrying capacity
Since resources for growth for most animal populations are finite and become limiting sooner or later, the logistic growth model is considered a more realistic one.