"Capacity utilization refers to the ratio between the actual output produced by a business or factory and its theoretical maximum capacity. It is a key economic indicator because it helps businesses or governments understand the state of economic activity and adjust accordingly.

Capacity utilization, usually expressed as a percentage, is calculated by dividing actual production by the theoretical maximum capacity and multiplying by 100. For example, if a factory's theoretical maximum capacity is to produce 1,000 units per day, but only 800 units are actually produced, then it is operating at 80% capacity.

Capacity utilization is very important to enterprises because it can help them understand their production efficiency and cost control. When capacity utilization is high, companies can achieve higher production efficiency and lower costs, thereby enhancing their competitiveness. For example, in the case of high capacity utilization, enterprises can obtain more profits, expand market share, increase employee wages and benefits, etc.

Conversely, when capacity utilization is low, firms may need to reduce production levels to avoid excess inventory and waste due to overproduction. In the case of low capacity utilization, companies may need to take cost-saving measures, such as reducing the number of employees, reducing the purchase of raw materials, etc.

In addition to its impact on enterprises, capacity utilization also has an impact on overall economic activity. When capacity utilization is high, overall economic activities can achieve higher productivity and more employment opportunities. Conversely, when capacity utilization is low, overall economic activity may suffer negative effects such as stagnation and unemployment.

Therefore, the capacity utilization rate is a very important economic indicator, which can help enterprises and governments understand the situation of economic activities and make corresponding adjustments to improve production efficiency and create more employment opportunities. "