Final answer:
A purely competitive firm is known as a price taker and maximizes profit by adjusting output, because it cannot influence market prices, which are determined by supply and demand.
Step-by-step explanation:
A purely competitive firm can maximize its economic profit (or minimize its loss) by adjusting only its output because it is a price taker. In a perfectly competitive market, firms are very small players in the overall market, meaning they cannot noticeably affect the overall quantity supplied and price in the market. A firm in a purely competitive market assesses the prevailing equilibrium price, which is determined by the supply and demand in the entire market, rather than by any single farmer or producer. Thus, their only strategic move is to decide what quantity to produce in order to maximize profits or minimize losses.