Question

Illustrate graphically how each of the following events will impact the demand for cups of coffee and explain why demand changes.
a. Average hourly wages increase in the United States.
b. The state of California requires all coffee houses to post warnings to consumers of the cancer-causing components of coffee.
c. Coffee houses increase the price of coffee in order to pay their baristas more.

Answer 1

Answer:

A. If average hourly wages increases, this would incentivise workers to work more hours so as to earn more wages. As a result of increased hours, more cups of coffee would be produced. This would lead to a rightward shift of the demand curve

B. As a result of the warning, individuals would be less willing to buy coffee. This would lead to a leftward shift of the demand curve

C. If the price of coffee increases, it would lead to a upward shift up along the demand curve as people would be less willing to buy coffee.

Please check the attached images for the graphs

Explanation:

Only a change in the price of a good leads to a movement along the demand curve.

Other factors affecting demand lead to a movement of the demand curve either rightward or leftward