Under-Capacity
Production capacity below available maximum.
Formula
Capacity Utilisation (%) = (Actual Output / Maximum Capacity) × 100
Real World
During the 2020 lockdowns, Airbus ran many assembly lines well below capacity as airline orders collapsed, pushing fixed costs per aircraft sharply higher.
Exam Focus
Always link under-capacity to rising unit fixed costs in 'explain' questions — the chain of reasoning earns the marks.
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