The capacity of a firm can best be described as:
A)when a firm are producing maximum output
B)a firm's production when operating normal hours using a normal sized workforce
C)when a firm makes full use of all the space available in his factory or building
D)when all of the firm's workers are producing at their maximum potential

Question

Quizplus · Accepted Answer

The capacity of a firm refers to the maximum amount of goods or services that it can produce within a specific period of time under normal operating conditions, using normal working hours and a standard workforce. It is the production level at which a firm can meet the demand for its products without causing inefficiencies or excessive costs. Choice A refers specifically to maximum output, which may not always be sustainable or financially viable. Choice C refers to physical capacity, which may not necessarily equate to productive capacity. Choice D refers to individual worker potential, which may not reflect the overall capacity of the firm.

The Capacity of a Firm Can Best Be Described As