If the demand for good X is more elastic than the demand for good Y, consumers will generally bear a higher portion of the tax burden for good X than for good Y.

When we talk about demand elasticity, we refer to how sensitive consumers are to price changes. If the demand for good X is more elastic, it means that if the price goes up, consumers will buy much less of it. On the other hand, if good Y has inelastic demand, consumers will still buy it even if the price increases. When a tax is added, consumers of good X are likely to reduce their purchases more than those of good Y, which means that producers may have to absorb more of the tax for good X to keep sales steady. For example, if a tax is placed on a luxury item like fancy shoes (good X), consumers might stop buying them, while they would continue buying necessities like bread (good Y) even if the price rises due to tax.