Plant capacity refers to the maximum level of output or production that a firm's facilities and resources are capable of achieving over a given period. It represents the physical limit on how much a firm can produce.
Related terms
Fixed Costs: Costs that do not vary with changes in output or production, such as rent for factory space.
Variable Costs: Costs that change in direct proportion to changes in output or production, such as raw materials.
Marginal Cost: The additional cost incurred by producing one more unit of output.