A windfall profit tax imposed on oil companies would shift the firms'

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A windfall profit tax is a tax on profits that exceed a certain level, often imposed on industries that have experienced sudden gains in profits due to external factors such as changes in market conditions or government policy. In the case of oil companies, a windfall profit tax would increase their average cost curve by increasing the overall cost of production, thereby reducing profitability. This would shift the firms' average cost curve upwards, meaning they would have to charge higher prices to maintain their profit margins.

A Windfall Profit Tax Imposed on Oil Companies Would Shift