Capacity Utilization Measures Current Manufacturing Output Against Potential Output

question 6

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 plant and equipment
• B)As capacity utilization increases,companies bring less efficient plant and equipment on line
• C)When the capacity utilization rate moves above 80 percent,inflationary pressures may start to build in the economy
• D)All of the above are true

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Definitions:

Gains Or Losses

The financial results from selling assets or incurring liabilities, measured as the difference between the sale proceeds and the value recorded in accounts.

Property, Plant

Long-term tangible assets, such as land, buildings, and equipment, used in the operation of a business to generate income.

Continuing Operations

The parts of a business that are expected to continue operating in the future, as opposed to operations that have been discontinued or sold.

Selected Unrealized Gains

Gains on investments that have increased in value but have not yet been sold or realized.