Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 350 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health.
The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms will respond by

Less.

Producing less.

Explanation:

...to demand LESS shrimp at every price. In the short run, firms will respond by PRODUCING LESS.

Seeing as Shrimp is now considered unhealthy, consumers in a bid to save their health will demand LESS of shrimp at every price.

This in turn will force Suppliers to produce LESS shrimp and because it is the Short run where costs are sticky (hard to change), they will incur losses as the price dips below the margin cost.

Lesser; Producing lesser shrimps

Explanation:

In the long run equilibrium, the shrimp industry produces 350 million pounds per year at a price of $5. When the surgeon general issues a report telling people that eating shrimp is bad for one's health, it will lead to consumers requesting for lesser shrimp at each price.

In the short run, the firms will respond by producing lesser quantities of shrimp. Since the demand for shrimp will reduce, the shrimp producers will also reduce their supply.

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