Final answer:
An industry is expected to expand when firms are earning positive profits, which inspires existing businesses to grow and new ones to enter the market. This process is called entry. Increased profitability can lead to better or cheaper products, higher incomes for employees, and overall national economic gains.
Step-by-step explanation:
An industry is expected to expand if firms in the industry are earning positive profits. In a competitive market, these profits act as a signal that can lead to the expansion of existing companies and the entry of new ones into the market. This process is known as entry, which happens when businesses perceive industry profits to be an attractive opportunity. Increased profits not only stimulate expansion and investment in the industry but also encourage new firms to start production.
When businesses offer better or less expensive products, they often see an increase in profits. This, in turn, translates to more income for employees and generally contributes to the overall economic well-being of the nation, as the gains typically outweigh the losses.