The local government decides to impose a sales tax on some selected items. On item X the
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Question:
The local government decides to impose a sales tax on some selected items. On item X the final prices increases almost the full amount of the tax, demand does not change much and the tax revenues collected are quite high. On item Y the price increases very little but demand falls quite a bit and very little tax revenue is collected.
Is this a violation of the law of demand or something else? Explain.
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