Final answer:
During the growth stage of the industry life cycle, it is demand that increases rapidly, driven by increased consumer interest and needs for the industry's offerings.
Step-by-step explanation:
During the growth stage of the industry life cycle, demand increases rapidly. This is because an improvement in product quality is treated as an increase in tastes or preferences, meaning consumers demand more of the product at any price level, thus demand shifts to the right. Additionally, research and development (R&D) is essential for technological improvements, but the fruits of such labor are uncertain and can take a long time to materialize. Once successful, improved technology can lead to a reduction in the cost of production, causing a rightward shift in the supply curve.
However, it is the initial increase in demand that characterizes the growth stage of an industry. This rise in demand often occurs due to an increase in consumer interest and need for the products or services the industry provides. The cycle typically follows a path where increased demand leads to higher production, which later might result in technological improvements, but the primary driver in the growth stage is the increase in demand.