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Excess Capacity

Definition of 'Excess Capacity'

Equipment above what the firm needs to fulfill current demand.

Firms often ensure that they have enough capacity to deal with random fluctuations in demand which may occur.

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Related Terms

Debt Capacity Agent/Agent Bargain Borrowing Capacity Break-Even Expansion Capital Financial Slack Rating Accommodatory Monetary Policy Accountable Plan Budget Deficit Consumer Surplus Efficient Market Hypothesis Producer Surplus Profits Surplus Value Ways and Means Advances

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