Capacity

The maximum level of output of goods and/or services that a given system can potentially produce over a set period of time. In most cases, it is unlikely that any system will operate at full capacity for prolonged periods, because natural inefficiencies and other factors decrease potential output.

The widget manufacturer may be able to produce 150,000 widgets in a month. However, due to downtime because of equipment maintenance and worker illness, only about 130,000 widgets can actually be produced per month. Over the long run, a business can increase its capacity and output by acquiring more factors of productions. For example, if market demand for widgets spikes, the widget manufacturer can buy more equipment and hire more workers, and thus increase its capacity to 175,000 widgets per month.


Investment dictionary. . 2012.

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  • capacity — ca·pac·i·ty n pl ties 1: a qualification, power, or ability (as to give consent or make a testament) created by operation of law 2: an individual s ability or aptitude; esp: mental ability as it relates to responsibility for the commission of a… …   Law dictionary

  • Capacity — is the ability to hold, receive or absorb, or a measure thereof, similar to the concept of volume.Capacity may also refer to: *Capacity (economics), the point of production at which a firm or industry s average (or per unit ) costs begin to rise …   Wikipedia

  • Capacity — Ca*pac i*ty (k[.a]*p[a^]s [i^]*t[y^]), n.; pl. {Capacities} ( t[i^]z). [L. capacitus, fr. capax, capacis; fr. F. capacit[ e]. See {Capacious}.] 1. The power of receiving or containing; extent of room or space; passive power; used in reference to… …   The Collaborative International Dictionary of English

  • capacity — [kə pas′i tē] n. pl. capacities [ME & OFr capacite < L capacitas < capax: see CAPACIOUS] 1. the ability to contain, absorb, or receive and hold 2. a) the amount of space that can be filled; room for holding; content or volume [a tank with a …   English World dictionary

  • capacity — ► NOUN (pl. capacities) 1) the maximum amount that something can contain or produce. 2) (before another noun ) fully occupying the available space: a capacity crowd. 3) the total cylinder volume that is swept by the pistons in an internal… …   English terms dictionary

  • capacity — early 15c., from M.Fr. capacité (15c.), from L. capacitatem (nom. capacitas) breadth, capacity, from capax (gen. capacis) able to hold much, from capere to take (see CAPABLE (Cf. capable)). Meaning largest audience a place can hold is 1908. Verb… …   Etymology dictionary

  • capacity — [n1] volume; limit of volume held accommodation, amplitude, bulk, burden, compass, contents, dimensions, expanse, extent, full, holding ability, holding power, latitude, magnitude, mass, measure, proportions, quantity, range, reach, retention,… …   New thesaurus

  • Capacity —   [engl.], Kapazität …   Universal-Lexikon

  • capacity — *ability, capability Analogous words: amplitude, *expanse, spread: extent, magnitude, *size, volume: aptitude, *gift, faculty, talent, bent, turn, knack Antonyms: incapacity Contrasted words: powerlessness, impotence (see corresponding adjectives …   New Dictionary of Synonyms

  • capacity — n. ability to hold 1) to capacity (filled to capacity) 2) lung; seating; storage capacity 3) a capacity of (a capacity of twenty gallons) ability 4) intellectual, mental capacity 5) one s earning capacity 6) a capacity for (a capacity for making… …   Combinatory dictionary

  • capacity — A lending and credit analysis term that describes a borrower s or applicant s ability to meet debt service obligations. See debt service coverage. American Banker Glossary credit grantor s measurement of a person s ability to repay loans.… …   Financial and business terms

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