A tax placed on a good that is a necessity for consumers will likely generate a tax burden that a. falls entirely on sellers b. falls more heavily on buyers c. is evenly distributed between buyers and sellers d. falls more heavily on sellers
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When a tax is imposed on a necessity, such as food or medicine, the demand for that good is generally inelastic, meaning consumers will continue to buy it despite price increases. As a result, the tax burden tends to fall more heavily on buyers, as they are less sensitive to price changes for essential goods. In addition, sellers may try to absorb some of the tax to keep customers, but given the necessity's inelastic nature, they often end up passing most of the tax cost onto consumers. This situation creates a classic example of how taxes impact market behavior, highlighting the balance between consumer necessity and economic policy.