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The effect of this oil refinary burning down would be a decrease in demand
because there would be a decrease in the number of sellers.


There are 6 determinants of supply: resource prices, technology, taxes and subsidies, prices of complements/supplements, expectations, and number of firms. Any of these determinants can cause the supply line on the graph, to shift either right or left. Resource prices are the prices of the products that go into making another product. If the price of wood rises, than the supply of houses are going to go down. Technology is pretty self explanatory, if there is new technology, there will be more supply, and vice versa. Taxes and subsidies are opposite, with taxes as a cost and subsidies as a gain, therefore there will be more or less supply if there is either a tax or a subsidy. The prices of other goods is that when a product seems to be doing well in the market, companies will produce more of it, and if its doing poorly, then they will produce less. The price expectations is that when something is seen as doing great in the future, a company will probably produce more of that product, or save some of their current supply, so the current supply decreases. Finally number of sellers is also pretty self explanatory, if there are more firms making the product, then the supply will be greater.

All of these determinants cause a change in supply, however there can also be a change in quantity supplied. That is a movement from one fixed location to another on the same supply line, it is not the entire line moving. The cause of this can be the price of the product that is being produced

Question: Suppose a company hires 50 new employees, what will happen to the supply and why?

Answer: the supply will decrease, because the cost of inputs increases, therefore there is less money available to produce whatever is being made.