Questions: Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the a. government has required that sellers remit the tax payments. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. demand is more inelastic than the supply.

The answer is d. demand is more inelastic than the supply.

This option is incorrect because who remits the tax (sellers or buyers) does not determine who bears the majority of the tax burden. The tax incidence depends on the relative elasticities of supply and demand.

This option is incorrect because if the supply were more inelastic than the demand, sellers would bear the majority of the tax burden, not the buyers.

This option is incorrect for the same reason as Option 1. The incidence of the tax is independent of whether buyers or sellers are required to remit the tax.

This option is correct because when demand is more inelastic than supply, buyers are less responsive to price changes than sellers. Therefore, buyers will bear a larger share of the tax burden.