Which of the following best explains the cascading effect of taxation? (1) When tax imposition leads to a disproportionate increase in prices by an extent more than the rise in the tax. (2) When tax imposition leads to a disproportionate decrease in prices by an extent more than the rise in the tax. (3) When tax imposition leads to a disproportionate decrease in imports. (4) When tax imposition leads to a disproportionate decrease in exports.