CAPACITY UTILATION
- tells you how much you’re outputting as a percentage of how much you can output advantages of high capacity utilization
- ECONOMIES OF SCALE
- reduce firm’s unit costs, make it more competitive
- lower average cost of production, also likely higher profits
- firm is more efficient, makes the most out of their resources disadvantages
- workers can become overworked, exhausted and stressed
- machinery and capital equipment wear out + depreciate quickly. higher cost to replace
- high capacity utilization needs better IT systems. this is costly
- quality may go down as production goes up
