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The rate of actual output to the effective capacity is:
The rate of actual output to the effective capacity is: A. effective capacity
B. minimum usable capacity of a particular facility.
C. average output
D. Efficiency
E. sum of all of the organization's inputs.
The rate of actual output to the effective capacity is known as efficiency, which in a production context means operating without waste and at the lowest average cost, reflected at a point on the production possibility frontier.The rate of actual output to the effective capacity is known as efficiency (option D). Efficiency is a measure of the effectiveness of the input of energy to do work; it is calculated as useful energy or work divided by the total input of energy. In a production context, productive efficiency means that, given the available inputs and technology, it is impossible to produce more of one good without decreasing the quantity produced of another. This is often represented as a point on the production possibility frontier (PPF), which indicates an operation is producing without waste and at the lowest possible average cost. In the long run, in a perfectly competitive market, the price in the market is equal to the minimum of the long-run average cost curve, indicating that firms produce and sell goods at the lowest possible average cost. Similarly, a capacity factor is the ratio of actual performance over time to the peak possible performance—or average output divided by maximum output, expressed as a percentage.When capacity factors are mentioned, it can be in relation to how businesses operate and the level of capacity where operations are most efficient in terms of average cost. Many businesses can operate over capacity up to some effective physical limit, but will pay for doing so with diminished efficiency. Productive efficiency and capacity factors are pivotal in determining the optimal level of production to achieve cost savings and prevent waste....