When more of tax on a product is borne by the buyer than the seller, the commodity involved has

Analyze the question: The question asks about tax incidence, meaning who bears the burden of a tax. It asks what kind of demand a product has when the buyer bears more of the tax than the seller.

Concept: How a tax burden is shared depends on the relative elasticities of demand and supply.

• If demand is inelastic, buyers have few alternatives and must keep buying even at a higher price. Consumers therefore bear more of the tax.
• If demand is elastic, buyers cut back sharply when the price rises. Producers must absorb more of the tax, so the seller bears more.

Step-by-step solution:

1. A tax shifts the supply curve upward, which raises the price paid by the buyer.
2. When demand is inelastic, quantity demanded falls only slightly after the price rise. Sellers can pass most of the tax on to buyers.
3. So the buyer pays most of the tax, and the product has inelastic demand.

Checking the options:

• A. Perfectly elastic demand: The buyer bears none of the tax, because any price increase makes demand vanish. The seller bears all of it. ✗
• B. Perfectly inelastic demand: The buyer bears all of the tax. But the question says "more of the tax... than the seller," which means the burden is shared, with the buyer taking the larger share. This is not the extreme case. ✗
• C. Fairly inelastic demand: The buyer bears the larger share, but the seller still bears some. ✓
• D. Elastic demand: The seller bears more. ✗

Answer: C, fairly inelastic demand.

Exam tip: Remember "Inelastic = It's the consumer who pays." If the question says "more" or "larger share," choose the fairly inelastic option. If it says "entire" or "all," choose perfectly inelastic.