Taxes can be implemented on producer in two ways

• Specific tax or unit tax.
• Advalorem tax
• Unit tax is a specific rate on a production unit which is sold.

Taxes can be implemented on the producer in two ways

Tax incidence is divided according to the demand and supply elasticity can be explained graphically.

• The consumer bears the total tax incidence in perfect inelastic demand.
• The producer bears the total tax incidence in perfect elastic demand.
• Tax burden is divided equally between the consumer and producer in a unitary
  elastic demand.

• Inelastic demand more tax burden should be borne by the consumer, and the producer bears less tax burden.
• Inelastic demand more tax burden should be borne by the producer, and the consumer bears less tax burden.

• The producer bears total tax incidence in perfect inelastic supply.
• The consumer bears total tax incidence in perfect elastic supply.
• Tax incidence is divided equally between consumer and producer in unity elastic
  demand.

• The producer has to bear more tax incidence in inelastic supply.
• The consumer has to bear more tax incidence in elastic supply.