WK2 Fallacy of Cost Discussion Objective: Inspect the different basic economic market types and the degree of price competition present in each. Think about your home or car. If you decide to stay each night in your home or drive your car many miles every day, does your rent/mortgage or car payment vary? What about your electric or water usage at home, or your monthly gasoline usage? Fixed costs do not vary with the amount of output. Variable costs change as output changes. Decisions that change output change only variable costs. The fixed-cost fallacy or sunk-cost fallacy means that you consider irrelevant costs. A common fixed-cost fallacy is to let overhead or depreciation costs influence short-run decisions. The hidden-cost fallacy occurs when you ignore relevant costs. A common hidden-cost fallacy is to ignore the opportunity cost of capital when making investment or shutdown decisions. Read Chapters 4-6 in your textbook. Standup Economist on Mankiw: 5-minute comedy video about "translated" economics principles. Research the fixed cost fallacy as well as the sunk cost fallacy. Discuss why sunk costs are irrelevant for decision-making? Cite a personal experience where you incurred a sunk cost and how you handled the experience. Be sure to