Final answer:
According to the given information, when the legal incidence of a tax shifts away from suppliers to demanders, suppliers who face an inelastic supply could be worse off as they bear the tax burden and have to accept lower prices for their goods. Suppliers with an elastic supply are better positioned to pass the tax burden onto consumers.
Step-by-step explanation:
When the legal incidence of a tax shifts from suppliers to demanders, it typically means that demanders (consumers) are now legally responsible for paying the tax. However, the actual economic incidence of the tax, or who ultimately bears the tax burden, depends on the relative elasticities of supply and demand. When supply is inelastic, such as with beachfront hotels where there is a fixed number of properties and suppliers cannot easily change the quantity supplied, sellers have to accept the tax burden by receiving lower prices, as they cannot pass on these costs to consumers. Therefore, according to this scenario, suppliers would generally be worse off. If supply was elastic, suppliers could more easily avoid the taxed good and thus alleviate some of the tax burden by passing it onto consumers.