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 an 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 eat at Chili's but their friends wanted to go to Saltgrass, the price difference between Chili's and Saltgrass is their opportunity cost because they could have gone there instead and gotten the food they wanted more and spend less money.2. What is the production possibilities frontier and what is it for? The production possibilities frontier (PPE) is a curve on the chart that shows all the possibilities on the chart that the market can have. Points along the chart are considered obtainable and at the best market price. The plots within the chart are considered obtainable for a market, but not at market best. Plots outside the chart are considered unobtainable and are the best outcome of the market, however, they can be obtained through trading.