Spare Capacity
Unused production capacity available for growth.
Formula
Spare Capacity (%) = ((Capacity − Current Output) ÷ Capacity) × 100
Real World
During the COVID-19 pandemic, British Airways had enormous spare capacity as planes sat grounded at Heathrow — fixed costs like leases and maintenance still had to be paid despite zero revenue.
Exam Focus
Always state that fixed costs per unit rise when spare capacity exists — this is the mark-scheme mechanism examiners want.
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