Answer
Below the stone; Above the stone.
Work Step by Step
If the person pulls sharply, the bottom string suddenly has a large tension in it. The stone’s inertia momentarily keeps it in place and doesn’t immediately transmit the force to the top string. The bottom string, with its higher tension, breaks first.
If the person pulls slowly and steadily, the tension in the bottom string increases slowly, and the stone is in a state of quasi-equilibrium. Newton’s second law states that the upward force on the stone (provided by the tension in the top string) equals the downward force on the stone (provided by the tension in the lower string, plus the downward force of gravity). The top string, with its higher tension, breaks first.
