Laptop mic doesn't pickup sound. Though it shows audio level when I knock with finger

The microphone is picking up sound, and the PC is processing the signal, but, by default, the PC does not pass that signal to the speaker. This is done to prevent feedback, the squeal heard when you put two connected phones together.

However, if you're using headphones, and want to hear your voice to monitor it, you can send sound from the mic to the speaker/headphone jack:

  • Press Windows and type mmsys.cpl to open the Sound Control Panel.
  • On the Playback tab, right-click the correct speaker or headphone and set it as the default device.

Set default speaker

  • On the Recording tab, right-click the correct microphone and set it as the default device.

Set default microphone

  • With the microphone selected, right-click and select Properties.

  • On the Listen tab of the Microphone Properties dialog, set Listen to this device.

Set listen to microphone

Of course, expect feedback if the output is going to nearby loudspeakers.