- Capital Output Ratio (COR) is the ratio of capital to output.
- Formula: COR = Capital / Output.
- It measures how much capital is needed per unit of output.
- A lower ratio is beneficial for the economy.
- It means less capital is required to produce one unit of output.
- This indicates higher efficiency of capital.
- Example: COR of 3/1 (Rs. 3 capital for Rs. 1 output) is better than 4/1.