What is Capacity Utilization?

Legal Definition
Capacity utilization or capacity utilisation is the extent to which an enterprise or a nation actually uses its installed productive capacity. It is the relationship between output that is actually produced with the installed equipment, and the potential output which could be produced with it, if capacity was fully used.
-- Wikipedia
Legal Definition
A concept in economics which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity.