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During oxidation, an atom loses electrons. This loss of electrons leads to an increase in the atom's oxidation state. The process of oxidation is a fundamental concept in redox (reduction-oxidation) reactions where one substance is oxidized and another is reduced. When an atom loses electrons, it becomes more positively charged or less negatively charged, reflecting a higher oxidation state. This is critical in various chemical and biological processes, including energy production in cells and corrosion of metals. Therefore, the choice indicating that an atom loses electrons and increases its oxidation state accurately describes the process of oxidation.