Capital input measures have occasionally been used by
economists to measure productive capacity or potential output Y^{*}
(Berndt, 1990; page 153). Berndt explains that one well-known procedure gives
the optimal capital-output ratio as g_{t} =
K_{t}/Y_{t}^{* }; if g_{t} is the optimal
capital output ratio and constant over time, g_{t} may be replaced by g.
Then, given estimates of K_{t} and g_{t}, potential or capacity
output Y_{t}^{*} is computed as Y_{t}^{*} =
K_{t}/g_{t}. Next, actual output Y_{t} is compared to
capacity output Y_{t}^{*} to obtain a measure of capacity
utilization, Y_{t}/Y_{t}^{*}. In short, capital stock
measures are often used to measure potential or capacity output, as well as
capacity utilization.

Given a constant optimal capital-output ratio g =
K_{t}/Y_{t}^{*}, capacity output
Y_{t}^{*} can be expected to vary directly with the observed
capital stock K_{t}. Similarly, given a constant optimal capital-output
ratio g = K_{t}/Y_{t}^{*} and a constant resource stock,
capacity output can again be expected to vary directly with the observed capital
stock.

*Berndt and Fuss (1989) point out that these two measures
of utilization coincide only if there is but one fixed input (capital) and if
production is characterized by constant returns to scale.*

It is a short step in this linear, deterministic world to then equate capacity output with the observed capital stock and capacity utilization with capital utilization. When effort is used instead of capital stock, the concepts of available fishing effort and effort utilization are substituted for capital.