Avoidable Costs vs Unavoidable Costs - such as Sunk Costs

The video tutorial explains the concepts of avoidable and unavoidable costs, highlighting their relevance in decision-making. An example is provided comparing the costs of driving versus flying for a trip, illustrating how to identify relevant costs. The tutorial also covers sunk costs, emphasizing their irrelevance in future decisions and warning against the sunk cost fallacy.

What is a sunk cost and why should it not influence future decisions?

Discuss the concept of sunk cost fallacy and provide an example.