Final answer:
Producers of toxic waste will pay the greater share of an excise tax when the demand for toxic waste disposal is very elastic, as consumers with elastic demand are sensitive to price changes and can more easily avoid the product.
Step-by-step explanation:
If the demand for toxic waste disposal is very elastic, and the government imposes an excise tax on this service, the tax incidence or burden largely falls on producers rather than consumers. This concept derives from the principle that with elastic demand and relatively inelastic supply, consumers are more responsive to price changes and can more easily find alternatives or forego the product, hence producers cannot pass the full cost of the tax onto consumers without losing a significant amount of sales. Consequently, producers will bear a greater share of the tax, making the correct answer: 1) Producers of toxic waste.
It is notable that tax incidence reflects how the burden of a tax is shared between consumers and producers. Moreover, the elasticity of demand and supply determines how the tax incidence is distributed between them. When consumers are sensitive to price changes (elastic demand), they tend to absorb a smaller portion of the tax, resulting in a larger tax burden on the producers.