You might have learned that supply and demand dictates price before you graduated high school. There’s a less-discussed variable within—the capacity to pay.
Say that you and I are crawling through the hot desert, penniless and dying of thirst. We have a high demand for a drink of water.
Next, we’re lucky enough to find a trekker with a water canteen. Ah! Demand just met supply. A market is about to be created and we will live, right?
No. They charge just one penny for a drink. We can “demand it” all that we want. But since we’re penniless, we’re dead. We lacked the capacity to pay….