Final answer:
The tax incidence on buyers depends on the elasticity of demand and supply in the market.
Step-by-step explanation:
The tax incidence on buyers depends on the elasticity of demand and supply in the market. If demand is more elastic than supply, buyers will bear most of the tax burden. If supply is more elastic than demand, sellers will bear most of the burden. This is determined by comparing the price paid by buyers before and after the tax, as well as the price received by sellers after the tax.
In the example of a tobacco excise tax, where supply is more elastic than demand, consumers will bear most of the burden as shown by the large difference between the price they pay and the initial equilibrium price. Sellers receive a lower price after the tax, but this difference is much smaller than the change in consumers' price.
In conclusion, the tax incidence on buyers depends on the elasticity of demand and supply, with the burden falling more on buyers when demand is more elastic than supply, and more on sellers when supply is more elastic than demand.