For a given supply curve, if demand is more elastic, what happens to the deadweight loss from a tax?

When demand is more elastic relative to supply, the responsiveness of consumers to price changes is greater, meaning that a tax imposed on a good will lead to a significant decrease in the quantity demanded. As a result, the reduction in quantity traded in the market is larger than it would be if demand were inelastic.

Deadweight loss from a tax represents the loss in total surplus that arises because the tax distorts the market equilibrium, leading to a decrease in the quantity of goods traded. When demand is more elastic, the quantity traded decreases significantly due to the tax. This larger decrease causes a greater deadweight loss because the lost transactions (where consumers would have bought at least some amount of the good without the tax) are more substantial.

Thus, with a more elastic demand curve, the deadweight loss increases because consumers are more likely to reduce their consumption drastically in response to the tax. The implications highlight the importance of understanding elasticities in evaluating the efficiency of markets affected by taxation.