Capacity Utilization
Capacity utilization is a measure of the extent to which an enterprise or a nation uses its installed productive capacity. It is the relationship between output that is produced with the installed equipment, and the potential output which could be produced with it, if capacity was fully used. Capacity utilization is an important economic indicator, as it provides an indication of the degree of slack in the economy or a sector of the economy. It is also used to measure the efficiency of production processes.
History of Capacity Utilization
The concept of capacity utilization has been around since the early 20th century. It was first used by economists to measure the efficiency of production processes. In the 1950s, the concept was further developed by economists to measure the degree of slack in the economy. Since then, capacity utilization has become an important economic indicator, used to measure the level of economic activity in an economy or a sector of the economy.
Capacity utilization is also used by businesses to measure the efficiency of their production processes. By measuring capacity utilization, businesses can identify areas where they can improve their production processes and increase their efficiency.
Table of Comparisons
| Year | Capacity Utilization |
|---|---|
| 2020 | 75% |
| 2019 | 80% |
| 2018 | 85% |
Summary
Capacity utilization is an important economic indicator, used to measure the level of economic activity in an economy or a sector of the economy. It is also used by businesses to measure the efficiency of their production processes. Capacity utilization is the relationship between output that is produced with the installed equipment, and the potential output which could be produced with it, if capacity was fully used. For more information about capacity utilization, you can visit websites such as Investopedia, The Balance, and the Bureau of Economic Analysis.
See Also
- Gross Domestic Product (GDP)
- Economic Growth
- Productivity
- Inflation
- Unemployment
- Business Cycle
- Monetary Policy
- Fiscal Policy
- Interest Rates
- Exchange Rates
