An owner of capital might set their capital utilization rate below 100% because:
A)the depreciation rate goes up with the capital utilization rate.
B)machines wear out faster when used more intensively.
C)to make time available for maintaining their capital.
D)all of the above.

Question

Quizplus · Accepted Answer

All of the above reasons are valid for an owner of capital to set their utilization rate below 100%. A higher utilization rate can lead to faster depreciation, increased wear and tear on machines, and less time available for maintenance and repairs. By setting a slightly lower utilization rate, the owner can better manage the longevity and productivity of their capital investment.

An Owner of Capital Might Set Their Capital Utilization Rate