Which of the following is the case where capacity is measured in terms of inputs?

• A. Technical capacity
• B. Productive capacity
• C. Market capacity
• D. Economic capacity

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of capacity in microeconomics, which generally refers to the maximum output or level of activity that a firm or production process can achieve under given conditions.
2. Step 2: Recognize that capacity can be measured in different ways, such as in terms of inputs (resources used), outputs (products produced), or market factors (demand or economic conditions).
3. Step 3: Define 'Technical capacity' as the maximum level of output that can be produced with a given set of inputs and technology, focusing on the physical or technical limits of production.
4. Step 4: Note that 'Productive capacity' usually refers to the maximum output achievable, often measured in terms of output rather than inputs.
5. Step 5: Conclude that when capacity is measured in terms of inputs (like labor, capital, or raw materials), it is referred to as 'Technical capacity'.