Final answer:
The more inelastic the supply, the larger the tax burden producers must bear, as they have less flexibility to adjust their production in response to price changes.
Step-by-step explanation:
The more inelastic the price elasticity of supply, the larger is the portion of the tax borne by producers.
In the context of tax incidence, it's crucial to understand how the price elasticity of supply and the price elasticity of demand affect who bears the economic burden of a tax. If the price elasticity of supply is relatively inelastic, meaning that producers cannot easily adjust their quantity supplied in response to price changes, they tend to absorb a larger portion of the tax. This occurs because producers find it harder to pass the tax onto consumers in the form of higher prices due to their limited flexibility in adjusting supply.
Conversely, with an elastic supply, producers can more easily change their production levels and are less likely to absorb tax costs, shifting more of the tax burden to consumers.