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 Capacity:  The greatest volume that a container can hold.
The English system (used by the United States) uses the following units to measure capacity for liquids: teaspoon, tablespoon, liquid ounce, cup, pint, quart, gallon, and barrel.

Milk is sold in varying capacities. The school cafeteria usually has milk in half-pint containers. The grocery store sells milk in pints, quarts, half-gallons, and gallons.

The Metric System (used by most other countries) uses the following units to measure liquid capacity: milliliter, liter, and kiloliter.

Sodas, such as Coca-Cola and Mountain Dew, are sold in two-liter and three-liter containers.

Cubic Units and Dimensions
In the Metric System the units for volume are derived from units for length. For example, the milliliter is defined as a cubic centimeter. In other words, a milliliter is equivalent to the capacity of a cube with sides of length 1 centimeter. The largest volume (capacity) this cube can hold is:
V = length x width x height
=1 cm x 1 cm x 1 cm
=1 cubic centimeter.

So the dimensions of the cube are the length, width and height, and their product can tell us the capacity of the cube. These values describe how large the cube is.

In the same manner, the liter is defined as a cubic decimeter and the kiloliter is defined as a cubic meter.

Examples versus Non-Examples

Volume is sometimes used to mean capacity. To distinguish between the two terms, consider two boxes, one that is open and fillable and one that is solid. Let's say the first one is a juice box and the other one is a brick. Liquid can be poured into the juice box, but cannot be poured into a brick because it is solid. So we can say that we can measure the capacity of the juice box, but not the capacity of the brick. Yet we can measure the volume of each the box and the brick.