All other things equal, the deadweight loss of a tax on producers is higher when demand is elastic.
When the drop in the producer and consumer surplus exceeds the tax income, it is assumed that a tax has forced a deadweight loss. The tax carries a deadweight loss because it forces suppliers and consumers to alter their production. Both the buyers' and the seller's consumption and production are reduced as a result. This occurs as a result of the tax increasing consumer prices, which causes them to buy fewer things. It lowers the profit margins for sellers, causing them to scale back on production.
This performance variation causes the market to contract below its ideal size. Demand and supply elasticity measures how responsive market actors are to changing market conditions. Therefore, a higher demand and supply flexibility translates into a higher tax deadweight loss.
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