Capacity Utilization

The rate of capacity utilization effects the firm's costs of production and the nation's rate of inflation. There are a number of excellent sites on the Internet which provide capacity utilization statistics and discuss the relationship between capacity utilization and the level of inflation.
  1. Access "Capacity Utilization Explanatory Notes" to learn some things about the capacity utilization statistic.
    1. What does the capacity index measure?


    2. What concept does the capacity index show?


    3. What is capacity utilization? How does it differ from the capacity index?


      4.  

       

  2. To determine the code numbers being used for each of the categories in the table below, access "Documentation Files" . Be sure to note the code numbers, you will need them in the next steps. (Some of the code "numbers" change in the tables that you will access below. The code for "Manufacturing" becomes "GMF," the code for "Durable Manufacturing" becomes "GMFD, and the code for "Nondurable Manufacturing" becomes "GMFN.")
  3. "Historical Capacity Utilization" allows you to gather the capacity utilization statistics for 1979, 1980, 1981, and 1982.
  4. "Current Capacity Utilization" allows you to obtain the capacity utilization statistics for 1998 through 2004.
  5. Access Consumer Price Index Statistics and record the percent change in Consumer Price Index: Dec.-Dec. in the table below.


    6.  
    CAPACITY UTILIZATION Manufacturing Durable Manufacturing  Nondurable Manufacturing Dec.-Dec. Percent CPI Change

         		 Code: Code: Code:


    1979    		 Jan. Jan. Jan. %

    1980    		 Jan. Jan. Jan. %

    1981    		 Jan. Jan. Jan. %

    1982    		 Jan. Jan. Jan. %

    1998    		 Jan. Jan. Jan. %

    1999    		 Jan. Jan. Jan. %

    2000    		 Jan. Jan. Jan. %

    2001    		 Jan. Jan. Jan. %

    2002    		 Jan. Jan. Jan. %

    2003    		 Jan. Jan. Jan. %

    2004    		 Jan. Jan. Jan.  
What relationship, if any, do you see between capacity utilization and the inflation rates during these years (especially in the 1979-1982 period)? Why?
 
 
 

McConnell Website
Economic Links
My Homepage
ECO 212

Last updated March 1, 2004

Send comments to: jbremer@oakton.edu