Capacity utilisation
- Created by: CarlosRamos
- Created on: 23-04-17 06:13
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- Capacity utilisation
- (Current output/ maximum possible output) x 100
- If utilisation is low, fixed cost per unit is high
- Measures the proportion of potential economic output that is actually realized.
- Ways of improving capacity utilisation
- Increase demand
- Extra promotional spending
- Price cutting
- Launch new products
- Cut capacity
- If demand is lower than capacity, businesses can make workers redundant
- Reduce fixed cost
- Rationalisation
- Increase demand
- (Current output/ maximum possible output) x 100
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