Economists use the concept of costs to help make recommendations about production and pricing decisions. When making production and pricing recommendations, economists argue that variable costs are the most important costs to take into consideration in the short run while sunk costs should be ignored.

Please answer the following:

1. Provide a specific example of variable and sunk costs at your current, or former, place of employment.

2. Explain why the sunk costs should be ignored when making short-run production decisions.