What does the Efficiency or Unit-Cost Ratio measure?

• A. The relationship between inputs and outputs
• B. The total budget
• C. The number of staff
• D. The time required to complete tasks

Answer: (A)

Efficiency or unit-cost ratio tells you how effectively resources are turned into results by comparing what goes in with what comes out. It expresses output per unit of input or cost per unit of output, showing the relationship between inputs and outputs. For example, if you produce 100 units using $500, the unit cost is $5 per unit, or if you get more output with the same inputs, the ratio improves. This isn’t just about the total budget, the number of staff, or time alone—those are inputs or constraints. The ratio specifically captures how the level of inputs relates to the amount of output produced.