The Guild Wars 2 wiki states that Magic find is an attribute which increases a players chance to receive rare loot from drops, which would indicate that the quality of the drops increases, rather than the number of drops. This forum thread on Guild Wars 2 Guru again indicates that it is the quality of the items that increases, rather than the number of drops.
In addition to increasing the quality of drops, it will also effect getting crafting materials.
The current common belief is that all of your bonuses to magic find are additive and is used as a modifier value. So for example, if you have two bonuses of 50% magic find, you will end up with 100% total magic find.
If a mob had a 5% to drop a ‘fine’ quality crafting ingredient or piece of equipment that chance would be increased by the value of your magic find (100%) to 10%.
The easiest and cheapest way is to buy/make magic find food, but it is also possible to get magic find items, upgrades, and runes.
Good food to eat in order to increase your magic find is the Omnomberry Bar or Chocolate Omnomberry Cream. Chocolate Omnomberry Cream provides a 40% magic find bonus but for farming in general it would be better to use Omnomberry Bars as this also provides a +Gold find bonus, in addition to some experience.
You can pay real money to purchase gems, which introduces new gems to the system and balances out those gems spent on gem store purchases. If the rate at which gems are spent outpaces the rate at which they are bought, the total number of gems in circulation will decrease, and the gold:gem ratio will increase until it reaches a point at which people are more willing to spend real money on gems than to pay the exorbitant gold prices for gems. In this manner a balance would be maintained in the number of gems in the system.
Best Answer
Unless the loot bag explicitly states in the tooltip that it is affected by Magic Find (as some do), you should assume that Magic Find will not affect any loot bags or other containers that you open.
As stated in the Magic Find wiki article, Magic Find generally only affects the loot received directly when you slay a creature. It does not affect chests, the Mystic Forge, or any other sources of loot. It essentially increases the chances that you'll roll a higher "rarity category" in a slain creature's loot table.
It's unclear to me whether the boss chests received after killing a world boss count as a "creature kill" or a "chest" for the purposes of Magic Find. There seems to be an unofficial consensus that the contents of boss chests count as a "creature kill" and are therefore affected; with the loot being generated when the boss dies and then just held in the chest, the same way that creature loot is held on its body (or in a Wooden Chest/Steel Chest, if a rare/exotic was dropped) until you collect it.