Final answer:
In the maturity stage of the industry life cycle, the product has typically reached its full potential, experiencing narrower profit margins and increased price competition. Decreasing cost industries see lower costs and prices due to technological improvements or better-trained workers, while increasing cost industries have rising costs from limited resources like skilled labor.
Step-by-step explanation:
The maturity stage of the industry life cycle is characterized by certain economic dynamics. At this stage, the product or service in question has generally reached its full potential in terms of market saturation, leading to narrower profit margins as firms face intense competition, often on price, to maintain or grow their market share. In the case of a decreasing cost industry, as the market expands, both old and new firms benefit from lower costs of production, which results in the new zero-profit equilibrium intersecting at a lower price level than before, signaling that the industries and all the firms within them experience falling average total costs. This could be due to enhancements in technology across the industry or an upsurge in employee education levels, which are prevalent factors in high-tech industry scenarios, for instance.
In contrast, an increasing cost industry encounters rising costs of production as the market expands. This can occur because of limited inputs like skilled labor, which become more costly as demand for them rises, in turn driving up wages and production costs for firms. Thus, companies in these industries may need to navigate these challenges with an increasingly inelastic industry supply curve.