1. The Wall Street Journal reports that Southwest Airlines is reporting increases in pilot fatigue as flights have increased this year. The law of diminishing returns _____ to companies like Southwest because____________.

A. Does not apply; of economies of scale.

B. Does not apply; it has the option of engaging in downsizing.

C. Applies; fixed costs do not change as production levels change.

D. Applies; an increase in any variable input will eventually lead to a decline in the output from that input.

E. A and B only.