Production and First Welfare Theorem

[Ram]

I have few doubts in the following concepts...
1. Suppose production function is exhibiting increasing returns to scale and consumers' preferences are convex sets then will it result in competitive equilibrium if so why ??(if it results in competitive equilibrium then it is pareto efficient according to the First welfare Theorem)  if not so why??? need an explanation on this.....what will happen in case of CRS and DRS as well.....
2. If production function exhibits increasing returns to scale at optimal choice, then average costs of production will exceed marginal costs....why??? (Refer paragraph 2,page no:598 Ch:32 Production from Varian)...

Somebody Plz clear these concepts (Plz give explanation but not in simple yes or no form :P)..as am from non eco background facing little difficulty in understanding these topics...thanks in advance..

[anon_econ]

Hey i don't know anything abt CE with production but u don't need that for the 2nd question..IRS must imply that AC is falling, and if AC is falling then MC is less than AC.

[Ram]

hey now i got the second one...ya those 2 are different...anyway thanx :)