If firms are losing money in a purely competitive industry, then the long-run adjustments in this situation will cause the market supply to

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In a purely competitive industry, if firms are losing money in the short-run, some firms may leave the industry as a result of losses. This will cause a decrease in market supply, which will cause the price to increase until it reaches the minimum of the representative firm's long-run average cost curve. At this point, all firms in the industry will earn zero economic profits. Therefore, the representative firm's profits will increase in the long-run.

If Firms Are Losing Money in a Purely Competitive Industry