Final answer:
Growth from new businesses or downstream is unlikely to yield short-term profits for utilities. It is generally easier for production to expand over several years due to the complexities and costs involved. Moreover, profit generation from such expansions usually occurs in the long term.
Step-by-step explanation:
The statement that growth from new businesses or from downstream are likely to transform into profits for utilities in the short term is generally false. On the supply side of markets, it is commonly understood that it is easier for producers to expand production in the long term, due to the cost and difficulties associated with short-term expansion such as building new factories or hiring new workers. However, over several years, these expansions can lead to increased capacity and potentially more profits.
In a competitive market, short-term profits do serve as an incentive for businesses to expand or for new firms to enter the market. Such an act is known as entry. But the transformation into profits for utilities due to this expansion or entry is not immediate and typically occurs in the long term once the new capacities are fully integrated and efficiencies are realized.