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When there is a subsidy in a market, it lowers the cost of production for items because the government is providing money. This shifts the supply curve downward by the amount of the subsidy, essentially increasing supply. To accurately measure this, each point on the supply curve should be shifted downward by the amount of the subsidy. For instance, a $4 subsidy would shift a point like 100, 10 to 100, 6.
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