Optimum Capacity

Level of output of manufacturing operations that produces the lowest cost per unit. For example, a tire factory may produce tires at $30 apiece if it turns out 10,000 tires a month, but the tires can be made for $20 apiece if the plant operates at its optimum capacity of 100,000 tires a month. See also Marginal Cost.

Level of output of manufacturing operations that produces the lowest cost per unit.