What is the formula used to find capacity utilization?
Quick Answer
The following is the formula for Capacity Utilization: Capacity Utilization, CU = {(Actual Output - Potential Output) / Potential Output}. On the other hand, Capacity Utilization Rate, CUR = {(Actual Output - Potential Output) / Potential Output} * 100.
Continue Reading
Full Answer
Capacity utilization is the degree to which a business entity or an economy actually makes use of its established productive, according to Ready Ratios. This phenomenon is used to depict the relationship between the actual output and the likely output if capacity is utilized fully.
Economically, capacity utilization is highly significant since economic analysts make use of capacity utilization indicators to predict the degree of inflation effects. A flourishing market leads to a rise in capacity utilization, and the reverse is also true.
Learn more about EconomicsRelated Questions
-
Q:
What is the formula for the market value of debt?
A: The formula for the market value of debt is E((1-(1/(1 + R)^Y))/R) + T/(1 + R)^Y, where E is the annual interest expense, R is the cost of debt, T is the t... Full Answer >Filed Under: -
Q:
What is the consumption function formula?
A: The consumption function formula is C = A + MD. Where: C is the consumer spending, A is the autonomous spending, M is the marginal propensity to consume an... Full Answer >Filed Under: -
Q:
What is the opportunity cost formula?
A: The opportunity cost formula is a simple solution to answer the age old question of whether a particular course of action is worth starting. Opportunity co... Full Answer >Filed Under: -
Q:
What is a carrying capacity formula?
A: The carrying capacity formula is a mathematical expression for the theoretical population size that will stabilize in an environment and can be considered ... Full Answer >Filed Under:
