Final answer:
An expanding market is a sector where increased demand allows for growth without taking business away from existing companies. It's easier for producers to expand production over several years, allowing them to capitalize on long-term growth opportunities and the entry of new firms responding to profits.
Step-by-step explanation:
Understanding Expanding Markets
On the supply side of markets, producers of goods and services typically find it easier to expand production over the long term of several years. Building a new factory, hiring new workers, or opening new stores are actions that are more feasible during this time period, as opposed to the short run of a few months. In a competitive market, profits act like a red cape that incites businesses to expand.
If a business is making a profit in the short run, there's a strong incentive to expand existing factories or build new ones. In addition, new firms may also begin production. This process of new companies entering an industry due to increased profits is known as entry. The increase in supply and potentially new innovations lead to an expanding market or a sunrise industry.
An expanding market is characterized by increased demand which does not necessitate taking away orders from existing businesses. Instead, the entire market is growing, allowing for both established businesses and new entries to find opportunities without engaging in a zero-sum game. As such, in sunrise industries or emerging sectors, businesses can build and grow with a heightened potential for market entry and sustainable profits over time.