Consider a market with inelastic supply and elastic demand. How would a tax affect the distribution of tax burden, and why?

• A. Producers bear less of the tax burden because the supply is inelastic, meaning they cannot easily reduce quantity supplied.
• B. Both consumers and producers share the tax burden equally due to equal elasticity.
• C. Neither consumers nor producers bear the tax burden due to perfect elasticity.
• D. Consumers bear less of the tax burden because the demand is elastic, meaning they can easily reduce quantity demanded.

Answer: (D)