If firms are losing money in a purely competitive industry t

If firms are losing money in a purely competitive industry, then the long-run adjustments in this situation will cause the market supply to Multiple Choice increase, and consequently the representative firm\'s profits will increase. decrease, and consequently the representative firm\'s profits will increase. increase, and consequently the representative firm\'s profits will decrease decrease, and consequently the representative firm\'s profits will decrease.

Solution

Answer: Option 2: decrease, and consequently the representative firm\'s profit will increase.

Explanation: When firms are losing money in a purely competitive industry, they will reduce supply. This will shift the market supply curve to shift towards the left. The leftward shift in the supply curve will result in an increase in the price. This will increase the profits of the firms.