The more inelastic the supply curve in a goods market, the smaller will be the deadweight loss from a per-unit tax in that market.

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If the supply curve is inelastic, it means that producers are less responsive to changes in price, so they will bear more of the tax burden and pass on less of it to consumers through price increases. This results in a smaller deadweight loss because there is less distortion in the market caused by the tax. In contrast, if the supply curve is very elastic, producers are more responsive to changes in price, so they will pass on more of the tax to consumers through price increases. This results in a larger deadweight loss because there is more distortion in the market caused by the tax.

The More Inelastic the Supply Curve in a Goods Market