Tax Burden with Relatively Elastic Demand S₀ is the initial supply curve for a product with elastic demand (panel A). When a 25 cent excise tax is placed on the product, the supply curve shifts upward by the amount of the tax, S_0+Tax (panel B). With demand remaining constant at D₀, equilibrium moves to point a (3,000 units). In this case, output falls substantially when the tax is imposed because elastic demand means extreme price sensitivity. As a result, sellers end up bearing most of the burden of this tax, and the deadweight loss is relatively large (area cae).