Laugh with or laugh AT

After presenting a group video project in Government class...

Student #1: "Aw... come on, Mr. _(teacher's name)_! You liked our project..."

(laughter in class)

Student #2: "You so DID like it, Mr. _(teacher's name)_. You know you did."

Teacher: (says with sarcasm) "Yeah, yeah... sure I did."

Student #1: "You DID! You were LAUGHING!"

Teacher: "Well, there's really two ways to laugh: one with and one AT."

Class: "Oohhhhhh... BURN!"