Tax Burden with Relatively Inelastic Demand S0 is the initial supply curve for a product with inelastic demand. When a $1.25 excise tax is placed on the product, the supply curve shifts upward by the amount of the tax, to S0+Tax. Assuming demand remains constant at D0, the new equilibrium will be at point g. Because this demand curve is inelastic, consumers are willing to pay a higher price for the product, and bear nearly all the burden of the tax. The deadweight loss (area hge) is relatively small when demand is inelastic.