Question

4. (8 Points) Suppose a firm, Vinoil, uses 3 cups of Oil (O) and 1 cup of Vinegar to make one unit of salad

dressing. The price of oil is $2 per cup, and the price of Vinegar is $3 per cup.  

Using a graph, sketch the firm’s isoquant and isocost curves for Q = 6 units of output. Also, identify the cost-minimizing combination of Oil and Vinegar. On your graph, put Oil (O) on the vertical axis, and Vinegar (V) on the horizontal axis. Make sure your graph is accurate and correctly labeled. You may assume that the amount of Oil, Vinegar, and Salad Dressing are continuous variables.

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