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 Refer to Figure 6-25. In which market will the majority of the tax burden fall on buyers?

To determine in which market the majority of the tax burden falls on buyers, we need to analyze the price elasticity of demand and supply shown in each panel of Figure 6-25. Tax incidence (who bears the tax burden) depends on the relative elasticity of supply and demand:

1. **When demand is inelastic relative to supply** (buyers' quantity demanded is less responsive to price changes), the tax burden falls more on **buyers**.
2. **When supply is inelastic relative to demand** (suppliers' quantity supplied is less responsive to price changes), the tax burden falls more on **sellers**.

### Analysis of Each Panel:

- **Panel (a)**: Demand curve (D) is steeper than the supply curve (S), meaning demand is relatively inelastic compared to supply. This indicates that buyers would bear the majority of the tax burden in this market.
  
- **Panel (b)**: Supply curve (S) is steeper than the demand curve (D), indicating that supply is relatively inelastic compared to demand. Thus, sellers would bear the majority of the tax burden in this market.
  
- **Panel (c)**: The demand and supply curves appear to have similar slopes, suggesting a more equal distribution of the tax burden between buyers and sellers.

### Conclusion:
The majority of the tax burden will fall on buyers in **Panel (a)**, where demand is more inelastic relative to supply.

Would you like more details on tax incidence, elasticity, or other aspects of this analysis?

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**Related Questions:**

1. How does the elasticity of demand affect consumer tax burden in different markets?
2. What happens to tax incidence when both demand and supply are perfectly elastic?
3. Why do sellers bear more of the tax burden when supply is inelastic?
4. How can governments use elasticity to decide which goods to tax?
5. How would a subsidy change the burden distribution in each panel?

**Tip:** Remember that in markets where one side (demand or supply) is inelastic, that side bears more of the tax burden since it has less flexibility to change quantity in response to price changes.

Refer to Figure 6-25. In which market will the majority of the tax burden fall on buyers?

Explore how the elasticity of demand and supply affects tax burden distribution in different market scenarios shown in Figure 6-25. This detailed analysis covers the concept of tax incidence, showing why buyers bear more of the tax burden when demand is inelastic relative to supply. Ideal for students studying microeconomics at Grades 11-12.

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