Final answer:
Consumers bear a greater share of a tax burden when demand is more inelastic than supply, while sellers bear a greater share when supply is more inelastic than demand.
Step-by-step explanation:
In a market where demand is more inelastic than supply, consumers bear most of the tax burden. Conversely, if supply is more inelastic than demand, sellers bear most of the tax burden. The elasticity of demand and supply determines how the tax burden is distributed between buyers and sellers.
For example, if demand for a product is relatively inelastic, meaning that consumers are not very responsive to changes in price, and supply is relatively elastic, meaning that sellers can easily adjust their quantity supplied, then consumers will bear a greater share of the tax burden.
On the other hand, if demand is more elastic and supply is less elastic, sellers will bear a greater share of the tax burden. This is because consumers are more sensitive to price changes and can easily reduce their quantity demanded, while sellers have limited flexibility to reduce their quantity supplied.