Definition of capacity

The amount that can be produced by a plant, company, or economy (industrial capacity) over a certain period, if current resources (including capital, workers, etc.) are used to their fullest extent. A plant can be said to be operating at full capacity, or if resources are not fully used, at below full capacity. The percentage of capacity in use is expressed as the capacity utilisation rate. Spare, surplus or excess capacity is the difference between current output (utilised capacity) and what can be produced at full capacity.