The burden of a tax falls more heavily on the sellers in a market when a. demand is inelastic and supply is elastic b. demand is elastic and supply is inelastic c. both supply and demand are elastic d. both supply and demand are inelastic

The burden of a tax between buyers and sellers depends largely on the **elasticities** of both **demand** and **supply** in the market. - **Elasticity of Demand**: Measures how sensitive the quantity demanded is to a change in price. - **Elasticity of Supply**: Measures how sensitive the quantity supplied is to a change in price. **Key Principle:** - The **more inelastic** side of the market (whether demand or supply) will bear a **larger share** of the tax burden because they are less responsive to price changes. **Analyzing the Options:** a. **Demand is inelastic and supply is elastic** - **Demand (Inelastic):** Buyers are less sensitive to price changes and can bear more of the tax. - **Supply (Elastic):** Sellers can easily adjust their quantity supplied, bearing less tax burden. - **Result:** **Buyers** bear more of the tax. b. **Demand is elastic and supply is inelastic** - **Demand (Elastic):** Buyers are more sensitive to price changes and can reduce their quantity demanded. - **Supply (Inelastic):** Sellers cannot easily adjust their quantity supplied, bearing more of the tax burden. - **Result:** **Sellers** bear more of the tax. c. **Both supply and demand are elastic** - Both sides are responsive to price changes, so the tax burden is **shared** relatively equally. d. **Both supply and demand are inelastic** - Both sides are less responsive, so the tax burden is **shared**, but the distribution depends on the relative degrees of inelasticity. **Conclusion:** When **demand is elastic** and **supply is inelastic**, sellers are less able to adjust their sales in response to the tax, resulting in them bearing a larger portion of the tax burden. **Answer:** **b. demand is elastic and supply is inelastic**