Answer to Question 1
a) A fall in wages paid to workers will shift the supply curve of coffee to the right. This implies an increase in the supply of coffee.
b) An increase in the availability of high-yielding coffee plants will shift the supply curve of coffee to the right. This implies an increase in the supply of coffee.
c) A decrease in the quantity of land under coffee cultivation will shift the supply curve of coffee to the left. This implies a decrease in the supply of coffee.
Answer to Question 2
Economic growth is exponential in nature and this in one of the major reasons for the large differences in GDP per capita across countries. When an economy grows exponentially, new growth builds on past growth and the effects of growth compound. This implies that relative modest differences in growth rates translate into large differences in the level of GDP per capita after many years of growing.
