Consider a simple economic model of a market where the price is determined by the intersection of a downward-sloping demand curve and an upward-sloping supply curve. Imagine the market is initially in a stable state. Suddenly, a new government regulation unexpectedly increases production costs for all suppliers, causing the supply curve to shift to the left.

Instead of only comparing the initial and final stable states, analyze the sequence of events that occurs immediately after the cost increase but before the price has fully adjusted. Describe the market condition in this intermediate phase and explain the process by which the market moves to its new stable state. What specific insights about the market's functioning does this step-by-step examination reveal that a simple before-and-after comparison would miss?