Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the

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When demand is inelastic, consumers are less sensitive to price changes, resulting in a smaller decrease in quantity demanded due to the tax. This leads to a smaller deadweight loss because the market remains closer to the efficient level of trade. Choices A and C do not directly correlate with the elasticity of demand in the context of tax incidence.

Suppose a Tax Is Imposed on Sellers