And so, for any given price point, the demand would increase.

So that dynamic that we've been talking about, capacity utilization falling off, because we essentially had a demand shock.

So, income goes up, then that increases demand.

So, it would shift the demand curve to the right or it would increase demand.

If we lower the price of a product, that will raise the quantity demanded of that product.

If we talk about an actual quantity, we should say the quantity demanded.

So income goes down, demand goes up.

And so essentially, it will shift, it will change the entire demand curve.

Why is that important?

So this demand curve will also have the same shape from the top left to the bottom right it satisfies the law of demand.

Actually, we're going to start with aggregate demand and then start talking about aggregate supply.

I'd rather have than just getting more of this thing right over here

Or another way to think of it is, is this entire demand curve.

And so if income goes up for this laptop, the demand will increase.

And in those cupcake economics videos, I showed that if the demand is pushing up against capacity.

PRESSED

WRlTING Demand goes up.

There is more people that have money in their pockets.

And we can use it to launch nanosatellites into orbit.

Robin Chase being the other person who started it.

At any given price point, the quantity demanded will go up.

So I get to 8 now.

The supply demand balance is tight.

They decide to sell their house.

And if there's more cash in the banking system this guy right over here needs less

When we hold everything else equal, we're moving along a given demand curve.

So we'll put price in the vertical axis and we'll put quantity demanded in the horizontal axis.

So Scenario A, price is 2 60,000 units are demanded.

And I had this captured market. You didn't need contracts.

And then more people buy.

So then that allowed more people to bid on homes.

We have to meet the demand.

So you had this whole situation where the population was actually decreasing.

So it's now at 4 and then that kills off a lot of the demand.

Let me write that in green.

Scenario E, I raise it to 10.

And the way we show demand increasing is the whole curve shifts to the right so this right over here demand increased demand went up when income went up.

Now let's talk about another one of those factors that we've been holding constant.

I'm sure some of you out there are economists, and you know all about supply and demand.

When everything else is equal and you're only changing price, you're not changing demand.

So the government does the auction.

Even the new Jack 2 field in the gulf of Mexico would only supply a few months of domestic demand.

I should say how price relates to quantity demanded, and how quantity demanded relates to price.

We're not talking about a particular quantity of demand.

It was a slugfest.