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As we know, losses in the industry that occurred because of the reduction in demand will cause firms to exit the industry in the long run. This, in turn will cause supply to shift back and market price to rise. As long as there are losses firms will continue to exit over the long run until profits are back to zero. The graph below shows the new long run equilibrium.

8. As a result of the short run effect on the wool sock industry caused by global warming, the adjustment to long run equilibrium will consist of:

firms entering the industry due to increased profits, shifting the marginal and average total cost curves out until profits are zero. There are several things wrong with this answer. First, firms entering or leaving the industry don't shift cost curves. (In the section on long-run supply we did consider such a case, but this would be unlikely in general; and if it is to be considered as a possibility on a test, there will be obvious clues in the question indicating that this is going on.) Second, since we know the firms in the industry were suffering short term losses, entry would not occur.
firms leaving the industry due to losses, shifting the marginal and average total cost curves out until profits are zero. While it is true that firms will be exiting, firms entering or leaving the industry don't shift cost curves.
firms leaving the industry due to losses, shifting the industry supply curve out until prices fall enough to ensure zero profits. Firms leaving the industry don't shift the supply curve out, they shift it back. You must read carefully :-)
firms leaving the industry due to losses, shifting the industry supply curve back until prices rise enough to ensure zero profits.
firms entering the industry due to increased profits, shifting the supply curve out until profits are zero. This could be true if there had been an increase in demand, not a reduction, as is the case here.