Final answer:
Graphical illustrations show that an increase in wages leads to a rightward demand shift for coffee (a), health warnings can cause a leftward shift (b), and a price increase results in a movement along the demand curve unless perceptions change, leading to either no shift or a potential rightward shift (c).
Step-by-step explanation:
To illustrate graphically how each event impacts the demand for cups of coffee, we need to consider shifts in the demand curve on a graph where the vertical axis represents price and the horizontal axis represents quantity.
a. Average hourly wages increase in the United States. Higher wages increase consumers' purchasing power. As a result, the demand curve for coffee would shift to the right because more people can now afford to buy coffee at every price. This represents an increase in demand.
b. The state of California requires all coffee houses to post warnings to consumers of the cancer-causing components of coffee. This public information might decrease consumers' desire to buy coffee, shifting the demand curve to the left. This represents a decrease in demand due to health concerns.
c. Coffee houses increase the price of coffee in order to pay their baristas more. This is actually a change in quantity demanded, not demand itself. An increase in price results in a movement along the demand curve to a lower quantity demanded, but the demand curve does not shift. However, if the increased price is perceived as coffee becoming a luxury or providing higher quality, some consumers might increase their demand, leading to a rightward shift.