Suppose that a town council plans to raise the tax charged on each pack of cigarettes sold by 20 percent in order to raise its tax revenues. An economist points out to the council that the tax increase could possibly lead to a decrease in packs sold of more than 20 percent, and thus ultimately reduce the city's tax revenues. Which of the key concepts in economics is best represented by the economist's observation

China's new 5 percent tax on disposable wooden chopsticks, reflecting concerns about deforestation, has been praised by environmentalists. the move is hitting hard at the japanese, who consume 25 billion set of wooden chopsticks annually. almost all of the chopsticks used in japan come from china. the reuirements for chinese manufacturers of wooden chopsticks to pay the 5 percent tax is a factor in their external environment.