Final answer:
Over the range of output where the LRAC curve is rising, firms face diseconomies of scale leading to higher average costs. Within the flat section of the LRAC curve, they experience constant returns to scale with no significant cost changes.
Step-by-step explanation:
Over the range of output where the LRAC (Long-Run Average Cost) curve is constantly rising, the firm is experiencing diseconomies of scale. As output increases, average costs are increasing. Conversely, in the range where the LRAC curve is flat, indicating output levels between R and S, firms experience constant returns to scale, where average costs do not change significantly as the scale of production is varied. If a firm is operating on the flat-bottomed LRAC curve, they are likely to be competitive, regardless of whether they produce at the lower end or upper end of this range. It should be noted, however, that firms operating at a level of output lower or higher than this range may face higher average costs and might be unable to compete effectively.