Capacity Utilisation in a Vintage Model of United Kingdom Manufacturing

J. Ansar, A. Ingham, H. Leon, M. Toker and A. Ulph

Chapter 5 in Working Below Capacity, 1987, pp 79-116 from Palgrave Macmillan

Abstract: Abstract ‘Capacity utilisation’, ‘capital utilisation’ (or whatever) is a decision by a firm to operate at different levels of activity. Questions about utilisation thus become questions about how firms or industries operate. This was recognised by Winston and McCoy (1974), who considered optimal idleness in a model in which the cost of labour varied over the 24 hours of a day. These changes in wage rates produced a rhythm which will be reflected in when machines are used. In their model, machines are homogeneous and output and labour combine through a neo-classical production function to determine the output level. So in order to produce a given output per day it is possible to vary the capital—labour ratio across the day whilst installing sufficient machines to generate the desired output overall.

Keywords: Capital Stock; Variable Cost; Labour Demand; Capacity Utilisation; Factor Price (search for similar items in EconPapers)
Date: 1987
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DOI: 10.1007/978-1-349-08649-8_5

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