Excess capacity refers to a production capacity which falls below the potential capacity available to the producer.
Excess Capacity. Occurs when a firm or industry is operating below cost-minimizing levels of output.
Excess Capacity. This term refers to the amount of available plant and equipment not in use. When producers have spare capacity, they tend to reduce prices or minimize price increases in order to boost sales.
excess capacity a situation in which a firm produces below the level that gives minimum average total cost. (11)
excess costs costs of production that are higher than the minimum average total cost. (11) ...
Excess capacity (under monopolistic competition) - The property of long run equilibrium in monopolistic competition that firms produce on the falling portion of their average total cost curves so that they have excess capacity measured by the gap between present output and the output that ...
~: The ability of a firm to increase production in the short run, without having to change any fixed inputs.
EXCESS RESERVES: The amount of reserves held by a bank that is available for loans.
~: A condition that exists when monopolistic competition achieves long-run equilibrium such that production by each firm is less than minimum efficient scale.
~ (in accounting)
Idle Capacity Variance (in accounting)
Short-Term (Short-Run) Decisions (in accounting) ...
A situation in which actual production is less than what is achievable or optimal for a firm. This often means that the demand in the market for the product is below what the firm could potentially supply to the market.
Economics Basics ...
Deflation is dangerous, however, more so even than inflation, when it reflects a sharp slump in DEMAND, excess CAPACITY and a shrinking MONEY SUPPLY, as in the Great DEPRESSION of the early 1930s. In the four years to 1933, American consumer prices fell by 25% and real GDP by 30%.
In short, producing countries are going to compete to get their excess capacity into production even if it means a devaluation of their own currency - generally considered devastating practice to any economy.
Note that as the scale for these two time series differ considerably (excess capacity is expressed in million barrels per day whereas WTI spot prices are expressed as USD per barrel) it becomes necessary to use a separate vertical axis for each time series to ensure a more suitable comparative ...
Deliberate building of excess capacity happens because of the difficulties involved in laying fibre optic cables: digging up the ground (or even worse, running cables through oceans) is very expensive, so there is every reason to lay more than you need immediately, ...
Returns to Scale
Cost Function Defined - Economics Glossary
Losses for a Monopolist
Excess Capacity Under Monopolistic Competition
Features of Competitive Markets ...
Accordingly, rather than looking to simply pick up "dots on a map"- with multiple facilities and infrastructure (and often excess capacity) that is both expensive and can spread management resources thin - buyers are increasingly targeting firms with greater market penetration over a relatively ...
In addition to that, an organization needs to choose an appropriate order pattern (e.g. 'Just- in- time') to avoid excess capacity.
'B' items are important, but of course less important, than 'A' items and more important than 'C' items. Therefore 'B' items are intergroup items.
profitability of the firms in the industry
whether the industry is producing at capacity or there is excess capacity already in place
the entry barriers to the industry
whether the industry's products are commodity goods or highly unique ...
domestic product, a level of GDP where the economy is at its optimal level of production. If GDP exceeds its natural level, inflation will accelerate as suppliers increase their prices. If GDP falls below its natural level, inflation will decelerate as suppliers attempt to fill excess capacity.
Frequently, however, qualified willing workers are involuntarily unemployed; there is no demand for the products they would produce. More spending will put them to work. Competition from firms with excess capacity and from idle workers will keep extra spending from igniting inflation.
See also: What is the meaning of Banks, Sector, Transaction, Expense, Saving?