How does the long-run supply curve differ from the short-run ...

[schs14]

How does the long-run supply curve differ from the short-run supply curve for a perfectly competitive firm? Explain your answer.
 
  What will be an ideal response?

Question 2

What is Rawlsian justice?
 
  What will be an ideal response?

[ErinKing]

Answer to Question 1

In the short run, if price falls to a point on the marginal cost curve that lies below average variable cost curve, then the firm should shut down. The firm's short-run supply curve is therefore the portion of its marginal cost curve that lies above average variable cost curve. In the long run, however, the supply curve is the portion of its marginal cost curve that lies above average total cost. This is because all costs are variable in the long run. Hence, when price falls below the minimum average cost, it becomes unprofitable for the firm to continue operations and the firm exits the industry.

Answer to Question 2

Rawlsian justice is a theory of distributional justice that concludes that the social contract emerging from the original position would call for an income distribution that would maximize the well-being of the worst-off member of society.