Capacity Utilization Measures Current Manufacturing Output Against Potential Output

question 27

Multiple Choice

Capacity utilization measures current manufacturing output against potential output. Which of the following statements is correct?

• A)When capacity utilization is low, companies use their most productive and efficient plants and equipment.
• B)As capacity utilization increases, companies bring less efficient plants and equipment on line.
• C)When the capacity utilization rate moves above 80%, inflationary pressures may start to build in the economy.
• D)All of the above are true

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Definitions:

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