Simultaneous Shifts and Total Economic Surplus
Suppose in the market for natural gas, two changes occur simultaneously: new environmental regulations cause a decrease in supply, and a growing consumer preference for cleaner energy causes an increase in demand. If the equilibrium quantity remains unchanged while total economic surplus decreases, which of the following must be true?
A
The market reached a more allocatively efficient equilibrium
B
The supply shift created a larger deadweight loss than the surplus gained from the demand shift
C
The price elasticity of demand must be perfectly inelastic
D
Consumer surplus increased more than producer surplus decreased
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