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An example that is very much in the headlines now is oil. The oil industry was incentivized in the mid-1970s to expand to the point that the United States could become energy independent of our suppliers.

Our prices rose sharply in the 1970s due to war and sparked this many decade pursuits of increasing production of oil. The sudden realization that our economy and security was dependant on a critical resource aligned incentives. The results were such things as the development of the Alaskan pipeline and expanded drilling within the U.S. In the early 2000's India and China's economy expanded, and their need for oil increased again, raising prices in oil. At about this time, a Texas oilman started experimenting with horizontal drilling into shale. The cost of oil was well over $100 a barrel, which meant that the higher cost of fracking would still be highly profitable and drilling further expanded production. This, in turn, helped the U.S. become oil independent roughly around 2014, and we became an exporter.

Today the U.S. oil industry is in serious trouble as the COVID pandemic dramatically turned down the demand for oil. Overproduction reduced the price to the point that there are now substantial losses for the oil producers for the near future and will result in lower output.

Summarising factors that impact business output in oil. Demand for the product cost to produce a product, availability of the product, potential profit, technical breakthroughs, politics, and even the natural world play decisive factors in production variability.