Inferior goods become more elastic as income increases and for superior goods they become more elastic as income decreases. II. Demonstrate knowledge of the concept of opportunity cost1. What is opportunity cost? Opportunity cost is the cost of someone doing something, but at the cost of what else they had to give up. Let's say someone wanted to go to Chili's to eat but their friends wanted to go to Saltgrass, the price difference from Chili's to Saltgrass is their opportunity cost because they could have gone there instead and gotten the food they wanted more and spent less money. 2. What is the production possibilities frontier and what is it for? The production possibilities frontier (PPE) is a curve on the graph that shows all the possibilities on the graph that the market can have. The points along the chart are considered obtainable and at the best of the markets. Charts within the chart are considered obtainable for a market but not at best. Charts outside the chart are considered unobtainable and represent the best outcome of the market, however it is obtainable via trade