The more elastic the demand, the smaller the burden of the tax placed on consumers.
The tax incidence depends at the relative price elasticity of supply and calls for. When supply is more elastic than demand, buyers undergo most of the tax burden. when demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is greater the greater inelastic the demand and supply are.
While deliver is extra elastic than call for, the tax burden falls on the shoppers. If demand is greater elastic than supply, manufacturers will endure the cost of the tax.
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