[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-323826-105":59,"doc-detail-323826-en":124},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":117,"head_meta":119,"extra_data":121,"updated_unix":123},105,"en","measuring-the-unseen-a-primer-on-capacity-utilization","Measuring the Unseen - A Primer on Capacity Utilization","","Economic Commentary explains what “capacity” and “capacity utilization” mean for firms and industries, and why the choice of definition matters for interpreting price pressures, investment, and war mobilization. It contrasts engineering (maximum physical output) and economist cost-based approaches, using average and marginal cost concepts and cost-curve intuition. A two-part series applies these ideas to Census Bureau and Federal Reserve capacity-utilization indicators.",{"@graph":69,"@context":116},[70,84,99],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/measuring-the-unseen-a-primer-on-capacity-utilization/323826/",{"url":83,"name":65,"@type":85,"author":86,"headline":65,"publisher":89,"fileFormat":92,"inLanguage":63,"description":67,"dateModified":93,"datePublished":93,"encodingFormat":92,"isAccessibleForFree":94,"interactionStatistic":95},"DigitalDocument",{"name":87,"@type":88},"Patrick","Person",{"url":74,"name":90,"@type":91},"DocShare","Organization","application/pdf","2026-09-21",true,{"@type":96,"interactionType":97,"userInteractionCount":4},"InteractionCounter",{"@type":98},"ViewAction",{"@type":100,"mainEntity":101},"FAQPage",[102,108,112],{"name":103,"@type":104,"acceptedAnswer":105},"What are the two main ways economists and engineers define “capacity”?","Question",{"text":106,"@type":107},"Engineering measures capacity as the maximum physical output a plant can produce with equipment in place. Economists often define capacity using cost concepts, such as the output level where average total cost is lowest (where marginal cost intersects average cost).","Answer",{"name":109,"@type":104,"acceptedAnswer":110},"How do average cost (AC) and marginal cost (MC) help clarify output decisions?",{"text":111,"@type":107},"Average cost is total production cost divided by current output level, while marginal cost is the additional cost of producing one more unit. Together, their curve shapes show how costs behave as output rises, including when fixed inputs become more intensively used.",{"name":113,"@type":104,"acceptedAnswer":114},"Why can capacity utilization figures exceed 100 percent?",{"text":115,"@type":107},"If firms increase production beyond the cost-based “capacity” level to maximize profits, output can rise above the benchmark where average total cost is lowest. Cost-based measures then imply utilization above 100 percent and may be linked to rising production costs and investment incentives.","https://schema.org",{"og:url":83,"og:type":118,"og:title":65,"og:site_name":90,"og:description":67},"article",{"robots":120,"canonical":83},"index,follow",{"doc_id":122,"site_id":62},323826,1789966292,{"code":4,"msg":5,"data":125},{"doc_id":122,"user_id":126,"nickname":87,"user_avatar":127,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":128,"file_id":129,"file_url":130,"file_type":131,"file_size":132,"view_count":4,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":133,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":134,"faqs":135,"seo_title":136,"seo_description":67,"update_tm":123,"read_time":137},549758146520,"https://ap-avatar.wpscdn.com/avatar/80002397d8c0411e94?_k=1775819394049821470","by Paul W.Bauer and Mary E.Deily  \nHow mucb uood could auoodchuckchuck ifauoodchuck could chuckwood?  \nAccordingto seveal avaitabhe measures,a large number of U.S.indus-tries are now operating at historicallyhigh levels of capacity utilization.Many analysts believe that furtherincreases in demand,fueled by con-tinued growth and especially by theexpansion in exports,could result ihigher output prices.This is particu-larly a concern if firms hesitate toexpand their capacity by investingin new plant and equipment.  \nAs a result,there has been considerable interest in understanding whatthe terms \"capacity\"and \"capacityutilization\"mean when referring tofirms and industries.Two basic typesof measures exist.The engineering,orwar mobilization,measure attemptsto represent the maximum physicaloutput that a plant can produce,andis probably closest to the laymans ideaof capacityBut economists find that abetter indicator of industry price pres-sure and future investment is one thatincorporates changes in productioncosts as output increases.  \n# Measuring the Unseen:A Primer on Capacity Utilization\n\nIn this Economic Commentary weuse a simple model of a single plant toillustrate these alternative definitionsof capacity and capacity utilizationand to examine their properties.Inthe upcoming issue,we use theseconcepts to analyze the capacity.utilization figures published by theCensus Bureau and by the FederalReserve.  \n## ■ The BasicConcepts\n\nEconomists use two cost concepts toclarify the problem any firm faces indeciding how much output to pro-duce.The first cost concept is aver-age,or unit,cost(AC),the total costof production divided by the currentlevel ofoutput.The second conceptis marginal cost(MC),the additionalcost a firm incurs to produce onemore unit of output.Since a firm isassumed to be working with agivenamount of plant and equipment thatcannot be varied in the short run,thisextra costarises only from the addi-tional labor,materials,or energyrequired to expand production.Typical shapesof the average costand marginal cost curves are plottedin chart 1.2 As the rate of outputincreases,average total cost initiallyfalls,since at low levels of productionincreasing the rate of output spreads  \nJune 15,1988  \nCapacity-utilization measures can beuseful in evaluating industry pricepressures,investment,and war mobilization capabilities.In this first articleof atwo-part series,the authors de-fine andexamine some of these meas-ures.The upcoming July 1 EconomicCommentary uses the concepts toanalyze two widely disseminatedindexes of capacity utilization.  \noverhead costs (the cost of fixedinputs)over more units.Marginalcost tends to be relatively flat across abroad range of outputs.At somepoint,as fixed inputs (such asmachinery)begin to be used moreand more intensively,marginal costrises more steeply and eventuallyexceeds average cost.At this point(point Ain chart 1),average cost startsto rise,in the same way that a baseballplayer's battingaverage will rise if hehits better than his average during agame.  \nFor example,suppose an airline wantsto increase the number of miles it flieswith its current number ofplanes.The airline can fly each plane faster,but doing so will increase the amountof fuel per mile that each plane uses.Thus,thecostof producing the extramiles will be greater than the currentcost per mile.  \nNote that this cost increase is notcaused by increases in the prices ofthe variable inputs (in this case,fuel).The increase occurs because morefuel per mile is necessary to produceextra miles when the airline is usingthe same number of planes.In sum,we can think of firms as able toexpand production over some rangein which the extra units will costabout the same.At some point,however,more-than-proportionalincreases in labor,materials,or energywill be required to increase outputfurther,thus raising both marginal andaverage costs.  \nSo far we have assumed that the firmis working with a fixed amount ofcapital,but over time the firm canvary this ","cbCaivw6EZVaXBdk","https://ap.wps.com/l/cbCaivw6EZVaXBdk","pdf",980355,"English","# Measuring the Unseen: A Primer on Capacity Utilization\n## ■ The Basic Concepts\n## ■ An Economic Definition of Capacity Utilization","[{\"question\":\"What are the two main ways economists and engineers define “capacity”?\",\"answer\":\"Engineering measures capacity as the maximum physical output a plant can produce with equipment in place. Economists often define capacity using cost concepts, such as the output level where average total cost is lowest (where marginal cost intersects average cost).\"},{\"question\":\"How do average cost (AC) and marginal cost (MC) help clarify output decisions?\",\"answer\":\"Average cost is total production cost divided by current output level, while marginal cost is the additional cost of producing one more unit. Together, their curve shapes show how costs behave as output rises, including when fixed inputs become more intensively used.\"},{\"question\":\"Why can capacity utilization figures exceed 100 percent?\",\"answer\":\"If firms increase production beyond the cost-based “capacity” level to maximize profits, output can rise above the benchmark where average total cost is lowest. Cost-based measures then imply utilization above 100 percent and may be linked to rising production costs and investment incentives.\"}]","Measuring the Unseen - A Primer on Capacity Utilization | PDF",13]