The correct answer is option 3, which states that both statements 1 and 2 are correct.

Statement 1 explains that when the demand for a product is inelastic, meaning that consumers are not very responsive to changes in price, the burden of a tax is shifted forward to the consumers. This is because even if the price increases due to the tax, consumers will still continue to buy the product because they need it and are not very sensitive to price changes.

Statement 2 explains that when the supply of a product is relatively more inelastic than the demand, the burden of a tax is shifted backward to the producers. This means that the producers, who have less flexibility in adjusting their supply, end up absorbing most of the tax burden rather than passing it on to the consumers. This could be because the producers have limited options for increasing their supply quickly or because the demand for the product is very elastic, meaning that consumers are very sensitive to price changes and will stop purchasing the product if the price increases.

Therefore, both statements explain different scenarios in which the burden of a tax is shifted either forward to consumers or backward to producers.