If you enter work when you assign resources, Project will recalculate duration. As far as how many people - that is up to you when you assign.
Many people enter rough estimates of duration when initially creating tasks and then further refine those duration estimates by assigning resources and their work estimates. As long as the assignment units are accurate (50%, 25%, etc) then you will have durations based more closely on the resource's work estimates and their availability.
Julie
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