As drawn, the curves first cross at a low level of income, labeled S (for subsistence). This is a stable equilibrium: If per capita income levels became somewhat larger than (were to the right of) S, it is assumed that population size will begin
to increase in part because higher incomes improve nutrition and reduce death rates. But then, as shown in the figure, population is growing faster than income (the ∆P/P curve is vertically higher than the ∆Y/Y curve), so income per capita
is falling, and we move to the left along the x-axis. The arrow pointing in the direction of S from the right therefore shows per capita income falling back to this very low level. On the other hand, if income per capita were a little less than S,
the total income curve would be above the population growth curve and so income per capita would be rising. This corresponds to a move to the right along the x-axis. Thus our conclusion that point S represents a stable equilibrium
(much as in our study of stable equilibria in Figure 4.1). This very low population growth rate along with a very low income per person is consistent with the experience of most of human history.