Detail

As shown below, in the long run as firms exit the industry shifting supply back, market price begins to increase. This causes firms to increase output and causes losses to start to diminish.

17. In the long run, due to the increase in the price of petroleum, what would we expect to observe within individual firms in the plastic knob industry relative to the short run equilibrium which occurred after petroleum prices rose? (Do not compare relative to the initial equilibrium before petroleum prices rose.)

prices rise, output falls, losses shrink. It's true that price rises and losses shrink, but because MC (firm's supply) is upward sloping rising price will always produce increasing output.
prices rise, output increases, losses shrink.
price fall, output increases, and profits grow. With firms incurring losses as they were it is necessary for price to increase. This will occur because firms will exit the industry shifting back supply so price can't fall. However, if it did output would fall not rise and profits would shrink not grow.
price fall, output falls, and losses grow. Price won't fall if firms are exiting the industry as the would because of losses, however the rest is consistent with a price decrease.
price stay unchanged, output falls, and losses grow. When price remains unchanged so does output, always.