What does an increase in output per factor of production represent?

An increase in output per factor of production signifies an improvement in productivity. Productivity is a measure of how efficiently inputs (such as labor, capital, and resources) are used to produce goods and services. When output per factor increases, it indicates that each unit of input is generating more output, reflecting more efficient use of resources. This can occur due to advancements in technology, better management practices, or enhanced skills among workers.

In contrast, a decrease in productivity would reflect less efficient use of inputs, stagnation in growth would indicate that output levels are not rising, and a decrease in capital investment wouldn't directly speak to productivity per factor of production but rather focuses on the amount of capital available for production. Thus, the increase in productivity is a key indicator of economic health and growth.