Just 2.1 LEARNING OBJECTIVE: Explain the causes and effects ofeconomies and diseconomies of scale.2.1 For each of the following, decide whether you agree or dis-agree and explain your answer:a. Firms that exhibit constant returns to scale have U-shapedlong-run average cost curves.b. Firms that exhibit increasing returns to scale are on thepart of the long-run average cost curve that is upsloping.2.2 Explain why it is possible that a firm with a productionfunction that exhibits increasing returns to scale can runinto diminishing returns at the same time.2.3 [Related to the Economics in Practice on p. 196] Oneof the more recent innovations in computer technol-ogy is called "cloud computing." With cloud computing,information and software are provided to computers on

There are decreasing, increasing and constant returns to scale.

2.1 For each of the following, decide whether you agree or dis- agree and explain your answer: a. Firms that exhibit constant returns to scale have U-shaped long-run average cost curves. b. Firms that exhibit increasing returns to scale are on the part of the long-run average cost curve that is upsloping.