Occurs when a firm or industry is operating below cost-minimizing levels of output. "Permanent excess capacity" is said to exist in industries requiring very large physical plants for which the size of the domestic market may be inadequate to fully absorb the output --limiting firms in the industry to production levels where economies of scale will not be fully exploited. Such conditions may set the stage for international trade conflict, since firms experiencing excess capacity may resort to unfair trade practices (Sec.l) to expand markets for their output in other countries. At the same time, excess-capacity firms generally have higher unit costs than necessary , making them vulnerable to predation by foreign competitors.
a situation in which a firm produces below the level that gives the minimum average total cost.
The difference between the minimum-cost output and the actual output in a long-run equilibrium. A famous and controversial conclusion of the theory of monopolistic competition is that firms under this form of market structure will tend to operate with excess capacity.
Resource capacity that exceeds what the market demands and any protective capacity requirements.
Capacity that is temporarily not needed by a transmission pipeline or LDC to meet customer needs
The number of students enrolled over and above school site facility capacity. (See School District Capacity below).
Pant resources that are underutilized when imperfectly competitive firms produce less output than that associated with achieving minimum average total cost.
A situation where the output capabilities at a nonconstraint resource exceed the amount of productive and protective capacity required to achieve a given level of throughput at the constraint. See: idle capacity, productive capacity, protective capacity.