An important concept related to capacity is capacity utilization (CU), or the amount of productive capital and inputs being utilized to produce a given output, relative to the level of output that could be produced if the capital stock, other fixed inputs, and variable inputs were fully utilized. Alternatively, capacity utilization is a measure of the actual utilization of the capital stock, other fixed inputs, and variable inputs relative to some desired or maximum potential utilization. Most often, CU is defined and measured as the ratio of observed or actual output (YO) to capacity output (YC). If the technological notion of capacity output is assumed, CU is always less than or equal to one in value. If the technologically-based CU is less than one, excess productive capacity exits; that is, either production could be increased with no change in actual fixed and variable input usage, or fixed and variable input levels could be reduced with no change in the production level. If CU equals one, productive capital, other fixed inputs and variable inputs are fully utilized. If the economic concept of capacity is considered, CU is not restricted to being less than or equal to one in value; in this case, CU can be greater than one in value. That is, actual output can be larger than desired economic output. If the economic concept of CU is less than one in value, excess capacity exists, or the input base is said to be under-utilized. If CU is greater than one in value, there is an inadequate utilization of capital, other fixed inputs, and variable inputs, or the input base is said to be overutilized. If CU equals one, capacity is fully utilized and all production inputs have reached their full equilibrium levels.