Demand responsiveness varies with price changes.
Marshall's formalisation. Its practical use is diagnostic: whether a tax falls on the seller or the buyer depends entirely on the relative elasticity of each side, not on who legally pays it.
In practice
- A tax on cigarettes falls mainly on smokers, whose demand barely moves; a tax on a substitutable snack falls mainly on the manufacturer.
- A rent rise in a town with no alternative housing is paid; the same rise where a new development opened is not.